Suppose that a client purchases 10 BTC over a price range of $180 to $290 and transacts twice with his BTC for a total purchase of 2.7BTC. Two questions:
- Based on this, the IRS taxes bitcoin like property, so until it's converted to fiat, it is not taxed when we're dealing with the client purchasing and later using it for purchases (note that if the client was receiving bitcoin in the form of income, it would be taxed)?
- When converted to fiat, which cost basis does the client use? The earliest/latest purchase of BTC, the highest/lowest purchase of BTC, or an average price?
I'm assuming that any fee assessed for purchasing BTC is not counted in tax information. Thanks all!