tl;dr
Steak ‘n Shake now accepts Bitcoin for purchases, but crypto payments are taxable events under IRS rules since cryptocurrencies are treated as property, not currency. Buyers must report capital gains or losses based on the difference between the purchase price and the value at the time of spending. ...
Steak ‘n Shake recently began accepting Bitcoin payments at its U.S. locations, allowing customers to purchase burgers, fries, and more using cryptocurrency. However, each Bitcoin transaction, no matter how small—like a $14 combo meal or a $3 Sprite—constitutes a taxable event as per IRS regulations.
Since the IRS classifies cryptocurrencies as property rather than currency, using Bitcoin to make purchases is treated as disposing of an asset. This triggers capital gains or losses, which taxpayers must report. The gain or loss is calculated based on the difference between the original purchase price of the Bitcoin and its market value at the time it is spent.
For tax reporting purposes, methods such as "first in, first out" (FIFO) are typically used. This means the earliest acquired Bitcoin is considered sold first when computing gains or losses. Taxpayers need to select one accounting methodology and apply it consistently throughout the tax year. Tax software and specialized accountants are valuable resources to help navigate these calculations.
While the IRS is less rigorous about auditing small crypto transactions currently, enforcement might increase as cryptocurrency exchanges like Coinbase and Kraken will start reporting user transaction data to the IRS starting next year. This enhanced reporting improves government oversight and increases the importance of accurate tax reporting by crypto holders.
There is ongoing lobbying by Coinbase and others to establish a de minimis exemption, which would exclude small-value crypto transactions from taxable reporting requirements—roughly mirroring a $300 threshold. Such a rule, if enacted, would relieve users from reporting minor crypto purchases, but it has not yet become law.
To avoid tax complexity, using stablecoins pegged to the U.S. dollar, such as USDC, for payments is an option. Stablecoin transactions are not taxable events because their value remains stable, which means holders do not realize gains or losses. However, converting cryptocurrencies like Bitcoin into stablecoins does trigger taxable events.
In summary, while Steak ‘n Shake embraces the crypto trend with Bitcoin payments, consumers should keep detailed records and be prepared for tax obligations related to every crypto transaction, regardless of size. Considering tax implications when spending digital assets remains essential for compliance and smart financial management.