[grandsham]

well, for one, the IRS doesn't treat bitcoin as a currency, but as a commodity. While some foreign currency transactions fall under the regime of capital gains, a transaction resulting in the gain/loss of less than $200 are specifically excluded from capital gains [1].

Note that this relates specifically to changes in value of the US currency in relation to the commodity or foreign currency. In this sense there is a difference between a sports car and a cup of coffee encoded in law. If the euro you bought for $1 is suddenly worth $1.02, and you buy a 1 euro coffee, you'll only realize $0.02 in gains, and not hit the $200 threshold. If you buy a 100,000 euro sports car, you will realize a $2000 gain, and have to report that on your taxes.

Since bitcoin is a commodity, it doesn't matter if the value moves 2 cents or 2 dollars or 2 million dollars, all gains are capital gains.

So if you buy a coffee with euros you specifically don't need to report that, but with bitcoin you do. Whether the IRS is going to notice that you don't record every single capital gain arising from a bitcoin transaction is another question, but there is a major difference between foreign currencies and bitcoin as far as the IRS goes.

[1]http://www.maximadvisors.com/2013/12/us-taxation-of-foreign-...