Can I deduct sent bitcoin as a business expense, as I am exchanging for a good strictly used for my business.

[cval1000]

I am going to create an LLC soon, but I want to ensure I can write off this business expense. I only buy the bitcoin to send it to someone else in exchange for a digital product that's used for my business. I am hoping that this can be considered an expense and the fact that it is bitcoin has little to do with it. I would hate to start the LLC and realize these occurrences of me buying and then sending the bitcoin to someone else can not be written off as an expense. Thanks for any help!

[JulieS]

Yes, you can deduct a business expense that was paid in Bitcoin. 

Because Bitcoin is treated as property for tax purposes, it is possible to have a gain or loss on the transaction in addition to a simple business expense.

Your gain or loss is the difference between the fair market value of the property you received and your adjusted basis in the virtual currency exchanged.  

In other words, if the item or service you buy with Bitcoin is more valuable than the amount you paid to acquire the Bitcoin, you would have a gain as well as a business expense. 

[cval1000]

Okay, just to clarify the "fair market value" would be the amount of bitcoin I pay in US dollars because I am buying an item that does not fluctuate in value, like other cryptocurrency's or physical assets. Therefore, fair market price and what I am able to write off as an expense is the exact amount of bitcoin I send the person to use for my business. @JulieS 

[Vanessa A]

Yes, if you are paying the FMV with bitcoin of the item you are going to purchase for your business, you would write off the price you are paying in bitcoin.

However, if you only paid $6 for the bitcoin that is now worth $10, you would also have to report a gain of $4.