Bitcoin taxes question for USA If one were to receive Bitcoins then immediately use a conversion service (for example to PayPal) would gains/losses need to be recorded?
If so, is there any software that can do this automatically?
Thanks in advance.
Bitcoin is taxed as capital property (see IRS Notice 2014-21), and a tax event occurs any time it is converted into fiat (e.g. USD) or other assets. You would have to record each transaction and include it in 1040 Schedule D.

This is the difference between how much USD you received less the value of those BTC when bought/acquired them. If you had owned those coins for more than a year, you can report it as "long-term" gains, which has a reduced tax rate. Otherwise, it "short-term", which is just taxed as normal income.

You can use https://bitcoin.tax to help work it out.