[gabestein]

I've been writing about Bitcoin for a while, so I'd definitely be interested to know where you end up on this. Please get in touch with me if you end up accepting payment in Bitcoin.

As for advice: consult your lawyer and accountant. The truth is Bitcoin is a huge grey area. There are some folks who think Bitcoin is an investment vehicle like gold or silver and should be reported as capital gains income.

http://qz.com/72637/why-bitcoin-millionaires-could-accidenta...

And there are others who would say that because you're using it as a form of payment, you should report it as regular income, probably in the same way you would income earned in a foreign currency.

http://www.businessinsider.com/do-you-have-to-pay-taxes-on-b...

Either way, you will need to report income in Bitcoin to your country's tax authority in some way or risk prosecution. Again, if you end up pursuing it, I'd be very interested in hearing the story.

[argonaut]

While I agree that OP should contact an accountant, I completely disagree that Bitcoin is a huge grey area when it comes to income vs capital gains.

Bitcoins that are paid to you are regular income. Period. There is absolutely no uncertainty as to whether it is income. Anytime you are straight up given something as payment, that's income. If your employer gives you stock (not stock options), it's income. If someone gave you a car as payment for a job, the value of that car is income.

Now, if the value of your bitcoins go up or down after receiving them, then that is a capital gain (or capital loss).

The uncertainty lies in how you would price Bitcoin at the time of it being granted to you. What I would advise is collecting (and keeping) documentation (a printout) that shows the market price on MtGox for BTC on the day you receive them. This is in case you ever get audited.

There is no need to involve a lawyer - only a (tech-savvy, I hope) accountant is needed.

Ultimately, I have no idea why you would prefer BTC to dollars, since it not only exposes you to (a slight) security risk, but it also introduces market volatility where the value of your BTC can swing 50% in a single week. BTC has most certainly not been stable at $120. But that's your choice.

I also have no idea why you would bother offering a discount for payment in BTC.

[wylie]

Thank you for the links. The first step is to find a client who would pay via Bitcoin, but I figure if businesses can accept Bitcoin then so can I.

I will definitely update you if I go through with it.

[gabestein]

You're quite welcome. Here's another one I found while thinking about your question:

http://blog.bitinstant.com/blog/2012/11/12/bitcoin-and-taxes...

Good luck, and thanks in advance for keeping in touch.

EDIT: Actually, that's not the one I was thinking of, although it's not bad. This is the more informative one:

http://www.dailydot.com/business/how-to-declare-bitcoins-tax...