The little-noticed provision, which dated back at least to October according to the cached version of an IRS webpage on Archive.org, appeared to mark the first time the agency has ruled on video game currencies, including Fortnite’s V-bucks, purchased with real dollars. By applying the same policy to in-game money that it enforces on bitcoin, ether and other cryptocurrencies, the IRS guide seemed poised to affect millions of gamers — or their parents.
But on Wednesday, the IRS scrubbed all mentions of the in-game currency from the webpage after questions from CNN and other outlets about the policy. Despite the sudden deletion, experts believe that transactions involving video game currencies will still need to be reported under a new question the IRS is including this year on tax forms. Just because the IRS deleted the language, they said, does not resolve questions about how the IRS plans to treat video game currencies.
The day after the agency deleted the guideline, IRS Chief Counsel Michael Desmond told reporters at a Washington conference that including the video game currencies had been a mistake, the agency confirmed to CNN on Thursday. Desmond’s remarks were first reported by Bloomberg.
“It was corrected and that was done quickly — as soon as it was brought to our attention,” Desmond said, according to Bloomberg’s report. However, the IRS did not respond when CNN asked for a statement clarifying the tax treatment of video game currencies.
The IRS’s changes only add to confusion about how it is handling tax filings for virtual currencies – and which digital products are lumped into the category. “[The] definition of virtual currency in IRS guidance would still encompass these,” Jerry Brito, executive director at the Coin Center, a virtual currency think tank, wrote on Twitter after the changes on Wednesday. “I don’t think they realized the consequences of their 1040 question.”
The agency has long reminded Americans that virtual currency is treated like property for tax purposes. When Americans buy bitcoin, for example, they need to keep track of how much they paid for it. When they sell, they need to report any appreciation in value and pay taxes on those capital gains (and can claim a loss if there were realized losses). Using bitcoin to buy goods and services, even a coffee, is still considered a sale of property and potentially a taxable event. The IRS published a landmark policy guidance in 2014 laying out the details, and another update last year.
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neverknwsbest said: Can’t wait till they hear about chuck-e-cheese
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