There are many possible implications stemming from El Salvador making BTC a legal currency .
U.S. TAXATION At the moment BTC is determined as below
Under IRS Notice 2014-21, the IRS opines that Bitcoin is “property” and not a “currency” because “it does not have legal tender status in any jurisdiction.” There is a good argument, though, that once Bitcoin is “legal tender” in El Salvador, it will qualify for US individuals as a “nonfunctional currency” (under Section 988), allowing individuals to forgo reporting gains on small, daily transactions—“personal transactions.” also for business Most US businesses use the US dollar as their unit of account for bookkeeping and reporting. However, there are cases where businesses operating primarily in foreign jurisdictions use a foreign currency—the unit of account does not have to be USD. The unit of account used by the business is the “functional currency” of the business and, perhaps, even an individual (see Sec. 985 IRC). If a business’s “functional currency” is a foreign currency, it does not have to bother with gains/losses related to USD fluctuations. Again, under Notice 2014-21, Bitcoin cannot qualify as a functional currency. And, again, this could change if El Salvador adopts Bitcoin as legal tender.
QUESTIONS EL SALAVADOR RAISES
Does adoption by El Salvador mean that banks treat it as equal to foreign currency Legal tender normally means that citizens in a country must accept that currency in transactions when offered will this occur ? No capital gains tax for BItcoin in El Salvador because it is legal tender Will El Salvador hold some BTC as part of its reserves
USA RESPONSE
USA has a history of invading central and south american countries when they show a wish to be independent which this would certainly do . The local currency collapsed some time ago and the usd has been the currency since then .
