So we should be tracking our bitcoin in our wallets by age, such that when spending we incur long term capital gain vs short term (if possible)?
Or perhaps use the most recent bitcoin purchased if the value is relatively the same as purchase date, thus seeing no gain (vs say 2 yr old coins which have greatly appreciated).
> So we should be tracking our bitcoin in our wallets by age, such that when spending we incur long term capital gain vs short term (if possible)?
That would have been daunting in the paper-records era, but with Bitcoin, discovering the tax implications may be a matter of running a shell script against a database of transactions.
In modern investment tax accounting, most issues revolve around comparing the present value of an asset against something called its "cost basis", meaning the price paid for the asset when it was purchased. This should be an easy issue to sort out for a virtual currency if proper records are kept.
Or perhaps use the most recent bitcoin purchased if the value is relatively the same as purchase date, thus seeing no gain (vs say 2 yr old coins which have greatly appreciated).