Apr 13, 2015
From KPMG TaxWatch
Recently, the New Jersey Division of Taxation issued a Technical Advisory Memorandum (TAM) addressing the use of convertible virtual currency, such as bitcoin, in commercial transactions. Virtual currency is a form of “electronic/digital money” that can be used as a medium of exchange or as a form of digitally stored value. Taxpayers may use it to pay for goods and services or hold it for investment. In some environments, virtual currency may operate like real currency (i.e., coin and paper money of the United States). In TAM 2015-01, the New Jersey Division of Taxation confirmed that it will follow the IRS in treating virtual currency as property. In addition, sales involving virtual currency will be treated as barter transactions. Sales tax will be due based on the exchange amount (into U.S. dollars) for the virtual currency. Sellers must record the value of the virtual currency accepted at the time of each transaction, and must retain documentation of the same or similar sales made in U.S. dollars. New Jersey will follow federal law that requires a taxpayer to recognize gain or loss from the sale or exchange of virtual currency. Please contact Jim Venere at 973-912-6349 with questions.
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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.