The Internal Revenue Service of the United States has ruled that it will treat Bicoin as a property for calculation of tax purposes which means that rules for barter transactions and stocks will be applicable to Bitcoin.
This ruling by IRS will bring certainty to Bitcoin investors. The application of this ruling means that if you buy a $2 cup of coffee from a shop with Bitcoins which you bought for $1, it means you have got $1 of capital gain for you and gross income of $2 for coffee shop owner.
This choice by IRS to treat Bitcoin as property will have far reaching implications for Bitcoin because it is likely to reduce Bitcoin transactions because you will need to think of capital gains before you purchase something with Bitcoin, which will be quite troubling.
It also means that if you buy bitcoins and sell it after year, this will attract lower lower tax rates that are applicable in case of capital gains. This rate is 23.8 percent at the highest while in case of property it is 43.4 percent.