But if you barter trade something that's worth $1500 for something else that's worth $1500, how is that a gain?
If you buy something for 10¢ and use it later to buy something that is worth $10,000, then under IRS rules for barter, you have to pay tax on the $9,999.90 gain.
See above, it is a Like-Kind Exchange and you can defer taxes on it. You can do a Like-Kind Exchange for capital property that is not one of the excluded categories. Virtual currencies are not one of the excluded categories.
Stan's point above about BitAssets is based on the idea of Like-Kind Exchange, which I am hoping will pass the Laugh Test. It should, as BitAssets are like Ziploc bags with different amounts of poker chips in them. One kind has $1 worth, another kind €1, yet another kind ¥1 worth, etc., but they all are just little plastic bags containing the same kind of poker chip.
Buying a Lambourghini with some bitcoins that one bought for 5¢ each a few years ago obviously would not be a Like-Kind Exchange.
No, trading bitcoins for a Lamborghini would definitely not be a Like-Kind Exchange. The IRS rules are very specific about Like-Kind Exchanges. Even trading a pickup truck for a Lamborghini would not constitute a like-kind exchange, although trading a Ferrari for a Lamborghini would be a like-kind exchange. It is my interpretation that standard crypto-currencies (i.e., those not explicitly tied to outside assets) qualify for like-kind exchanges, as they are not on the excluded list (see quoted section below).
I am not sure about BitAssets though. In particular, BitUSD might constitute a "debt" or IOU, which is equivalent to money, so therefore any trade resulting in the transfer of BitUSD could constitute a "sale" which is a taxable event. (I know that Ripple's implementation of USD trading involves the explicit creation of IOU-style USD instruments by third parties.) And some BitAssets might correspond with shares of stock, which are specifically excluded from Like-Kind Exchanges, so trades in and out of those BitAssets might be taxable events as well. I think that it will depend on the BitAssets in question, but IMO anybody trading in BitAssets should be prepared to fully document all of their trades and pay taxes on them accordingly.
I do not think that the argument that all BitAssets are essentially the same financial instrument (i.e., they are all BitShares) will pass the smell test. If people start using Bitcoin Colored Coins to represent interests in real estate, there is obviously a difference between a Colored Coin of nominal denomination 0.01BTC which carries an ownership interest in a house, and standard BTC used as a currency. Trading 100 BTC for that Colored Coin would technically just be trading BTC for BTC, but the addition of real estate makes it obviously not a Like-Kind Exchange.
What property qualifies for a Like-Kind Exchange?
Both the relinquished property you sell and the replacement property you buy must meet certain requirements.
Both properties must be held for use in a trade or business or for investment. Property used primarily for personal use, like a primary residence or a second home or vacation home, does not qualify for like-kind exchange treatment.
Both properties must be similar enough to qualify as "like-kind." Like-kind property is property of the same nature, character or class. Quality or grade does not matter. Most real estate will be like-kind to other real estate. For example, real property that is improved with a residential rental house is like-kind to vacant land. One exception for real estate is that property within the United States is not like-kind to property outside of the United States. Also, improvements that are conveyed without land are not of like kind to land.
Real property and personal property can both qualify as exchange properties under Section 1031; but real property can never be like-kind to personal property. In personal property exchanges, the rules pertaining to what qualifies as like-kind are more restrictive than the rules pertaining to real property. As an example, cars are not like-kind to trucks.
Finally, certain types of property are specifically excluded from Section 1031 treatment. Section 1031 does not apply to exchanges of:
Inventory or stock in trade
Stocks, bonds, or notes
Other securities or debt
Partnership interests
Certificates of trust
http://www.irs.gov/uac/Like-Kind-Exchanges-Under-IRC-Code-Section-1031Once again, I am not an accountant or other financial or legal professional, and the information in this post does not constitute legal, accounting, or other professional advice.