Since the IRS considers Bitcoin to be property and not currency, can my business deduct the expense of buying Bitcoin in order to conduct business?

[PatriciaV · Accepted solution]

Investment in Bitcoin is handled the same as any other investment. Sales are reported as Investment Income, with a sale price (or fair value), date, original cost and date, and the gain or loss.

Expenses relating to the purchase of Bitcoin would be included in the basis of the asset. Sales expenses would be reported as part of the sale rather than separate business expenses.

The actual sales are entered in TurboTax Home & Business under Personal Income -> Investment Income -> Stocks, Mutual Funds, Bonds Other as "Everything Else." The resulting capital gains/losses are reported on Schedule D.

[Carl]

Depending on how your business is structured, it would be considered inventory. What you paid for that inventory is not deductible until the tax year you sell it.

If you're set up as an investor, then the cost is not deductible until the tax year you sell or otherwise divest in the expenditure.