The IRS ruled that bitcoins and other cryptocurrencies are property, not currency. As such, you determine gain or loss in the same was as any other type of property. Compare what you paid for the bitcoins and what you received on the sale (making adjustments for commissions, etc.).
A business method of accounting requiring income to be reported when earned and expenses to be deducted when incurred. However, deductions generally may not be claimed until economic performance has occurred.