I bought bitcoins a few weeks ago. There are still in my virtual wallet and their value has increased since then. How do I report it to the IRS?

[DoninGA · Accepted solution]

Only when the product is sold do you report the gain or loss on a federal tax return.

[Anonymous]

Thanks DoninGA for the clarification! So bottom line as long as it's an investment, there's nothing to do?

If I decide to sell some of my bitcoins next year, how do I report that information to the IRS?

[DoninGA]

Right...as long as the product is not sold then there is nothing to report on your tax return.  When sold your gains or losses would be capital gains or losses and either long term or short term depending the when the product was purchased and sold.  You report the sale on the federal tax return in the year of the sale.