Crowdfunding With Bitcoins – Multiple Tax Bites?

Let’s say you bought a Bitcoin for $200 a few months ago and then used it to buy some shares on Angel List today at its current value $448.60 (according to

Here’s the problem. That transaction may have resulted in a taxable capital gain to you of $248.60 according to a new IRS ruling taxed at a typical  rate of 15%.

The IRS has taken the position that Bitcoins are NOT currency because they are not recognized as legal tender by any country. Instead, the IRS views them as property. When you buy a Bitcoin, that price will be your “cost basis.” When you sell that capital asset, you will either have a capital  loss or gain (long term if you held it for a year or more).

When you sell the securities you bought, you will also have a capital  transaction that could be taxable. And if you sell them for Bitcoins, you may have a third capital transaction.


About JeffKoeppel

I am a corporate/securities attorney in the Washington, DC area. Prior to joining the firm, I was a Senior Attorney Advisor in the Division of Corporation Finance at the U.S. Securities and Exchange Commission. I am a member of the Bars of the States of Maryland, New York and the District of Columbia. You can also follow this blog on LinkedIn at:
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