Credit card with Bitcoin rewards

[jklcpa]

I saw a TV commercial for this. How many clients will get these and not tell us?!  This seems like nightmare tracking unless the credit card issuer will be providing the detailed reporting for the tax returns.

[Lee B]

I don't think Credit Card Rewards have ever been considered taxable income.

The issue will arise when the bitcoin rewards are used to purchase something, or converted to cash.

At that time the FMV compared to the FMV at the time the rewards were issued, potentially would be taxable gain.

Will anyone track that?

[Pacun]

The appreciation should be taxable the same way that if you leave your money (collected from Card Rewards) and they earn interest, you pay taxes on that interest.

It is interesting to see that you should have basis on the bitcoin the same way you have basis when you cash the rewards and leave it in your checking account, (you pay taxes only on the interest).