Virtual currency is treated as property for U.S. Federal tax purposes. General tax principles that apply to property transactions apply to transactions using virtual currency. Consequently, all of the following are true regarding virtual currency except: A. Wages paid to employees using virtual currency are not taxable to the employee and are not subject to Federal income tax withholding and payroll taxes B. Payments using virtual currency made to independent contractors and other service providers are taxable and self-employment tax rules generally apply C. The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer D. A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property