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Recap HomeIRS Virtual CurrenciesUK Tax GuideSA Tax Guide
  • Cryptocurrency Tax Guide for US Individuals
    • Virtual Currency & Cryptocurrency
    • Who are Recap?
  • CRYPTOCURRENCY TAX
    • Do I Need to Pay Tax on my Crypto?
    • Which Taxes Apply?
      • Capital Gains Tax (CGT)
      • Income Tax
      • Non-Taxable Transactions
    • How Much Tax Will I Pay?
    • Capital Gains Tax
      • Calculating the Capital Gains and Losses
      • Cost Basis Methods
      • Disposal proceeds
        • Non Taxable Events
        • Taxable Events
        • Donating cryptocurrency to a charitable organization
        • Gifting cryptocurrency to another person
    • Income Tax
      • Receiving cryptocurrency from mining
      • Receiving cryptocurrency rewards
      • Forks
      • Airdrops
      • Tax on Tokenswaps and Mainnetswaps
    • Deductibles and Reducing Capital Gains
  • TRANSACTION TYPES
    • 💷Selling Crypto for Fiat
    • 🛍️Purchases using Crypto
    • 🔄Exchanging one crypto for a different crypto
    • 🎗️Donations to Qualified Charities
    • 🎁Gifts
    • 🎈Airdrops
    • 🤝Staking
    • 💸Transfers
    • 🍴Forks
    • ⛏️Mining
    • 👛Employment income
    • 🚨Lost & Stolen Crypto
    • 💧Liquidity Pools
    • 🔮Cryptoasset derivatives (CFDs, Futures and Margin Trading)
    • 💼Crypto Loans
    • 💎Lending Rewards
    • 🪞Reflections Rewards
    • 👥Referral Income
    • 💳Cashback
    • 🎨NFTs (Non Fungible Tokens)
    • 🎮Play-to-earn gaming NFTs
  • Record Keeping
  • Reporting Income and Gains to the IRS and Paying the Tax
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  • Selling & Trading NFTs or assets within a game
  • Earning NFTs within a game

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  1. TRANSACTION TYPES

Play-to-earn gaming NFTs

There is no IRS guidance on NFT’s or crypto rewards earned whilst gaming, so you would need to examine the specific circumstances and consult with a tax professional to determine the tax treatment.

Activity differs between games however, generally, it is likely that ‘in game’ earnings are taxable as they involve some form of crypto-to-crypto trade.

Selling & Trading NFTs or assets within a game

Although there is no guidance from the IRS, we would expect that selling or trading NFTs or assets within a game would generate a capital gains disposal. Again, clear IRScguidance is lacking but, as NFTs are classed as digital assets, which are subject to capital gains, we expect the normal rules of short-term and long-term capital gains to apply.

NFTs share some characteristics of fine art and trading cards so some speculate that they may be regarded as collectibles. We await specific NFT IRS guidance.

Earning NFTs within a game

There is no guidance from the IRS however we assume that earning an NFT or asset within a game would be taxable as ordinary income.

The IRS is yet to issue guidance on the tax treatment of NFTs. You should seek help from a tax professional.

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Last updated 3 years ago

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