“Bitcoin Taxation: Recommendations to Improve the Understanding and Treatment of Virtual Currency” assesses the Internal Revenue Service’s (IRS) current tax guidance as it relates to virtual currency, highlighting both positive and negative aspects. The goal of this paper is to provide policymakers with additional information regarding the tax responsibilities associated with bitcoin under this new guidance, as well as provide options to aid the IRS in fulfilling its mission of helping America’s taxpayers understand and meet their tax responsibilities while simultaneously encouraging innovation in the bitcoin and virtual currency ecosystem.