Is there more information on this? The IRS are planning on adding this question to form 1040:
"At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?"
How literal is "currency?" I would consider currency different than "assets" from a tax perspective. Can anyone provide some clarity or articles which provide any?
> Virtual currency is a digital representation of value, other than a representation of the U.S. dollar or a foreign currency (“real currency”), that functions as a unit of account, a store of value, or a medium of exchange. Some virtual currencies are convertible, which means that they have an equivalent value in real currency or act as a substitute for real currency. The IRS uses the term “virtual currency” to describe the various types of convertible virtual currency that are used as a medium of exchange, such as digital currency and cryptocurrency. Regardless of the label applied, if a particular asset has the characteristics of virtual currency, it will be treated as virtual currency for Federal income tax purposes.
Video game currencies are definitely sitting around the line. I don't know anything about WoW gold, so I can't say if it crosses the line into virtual currency. However, given that searching for "WoW gold" had the entire first page of results being nothing but people selling it, I do feel like it rather deserves to cross the line into virtual currency.
I mean if you sell wow gold it’s taxable. It’s income and taxable at your bracket.
If you use it purchase items in games it’s probably not. Especially if those items can’t be purchased directly. It’s similar to gift cards. Especially if you purchase items from the publisher, who pays tax on the income.
If you start using it to buy pizza it’s on the other side of the line. It’s an asset, and could be potentially taxable as an asset.
"At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?"
How literal is "currency?" I would consider currency different than "assets" from a tax perspective. Can anyone provide some clarity or articles which provide any?