This might not be too bad, if they can offset their income during a bear market to reduce the income taxes they pay, and also if it means they don't have to pay taxes when they eventually dispose of the bitcoin.

If you buy 1BTC at $100k, and price doubles so you pay taxes on $100k of income, if you then sell you shouldn't have to pay taxes on the gains, since they have already been taxed as income.

No taxes owed.

Yeah its a bit confusing but this is typical "book" change vs "tax" change. This happen currently with other "mark to market" accounting entries, so its not unique.

What you do is also create a "deferred tax liability" entry for that gain. So if you show $1,000,000 "income gain", you create a $220,000 "deferred tax payment" as a liability.

Then when you finally sell, those amounts become realized (at whatever real price).