If a taxpayer receives virtual currency in exchange for services, how is this reported on their tax return?

The taxpayer:

Does not recognize income until the virtual currency is sold or disposed.

Must report the full fair market value of the currency at the time received as income in the year received.

Does not recognize income unless the value of the services exceeds the value of the virtual currency.

May recognize a loss if the value of services exceeds the value of the virtual currency.