Comment: IRS doesn't consider Bitcoin as a virtual currency at all

Source: Cointelegraph Chinese Author: Andrey Shevchenko

Compile: Bowie

The Internal Revenue Service (IRS) has removed claims on its website that it uses game currencies as examples of convertible virtual currencies. This clarification is important because the new tax declaration requires taxpayers to report whether they are involved in virtual currencies.

On February 13, Bloomberg Tax reported the move for the first time. The official guide on the IRS website states that V-bucks in Fortnite and Robux in Robot Bricks are both virtual currencies. A screenshot of the official website provided by Bloomberg Tax shows a fairly detailed concept of virtual currency, which even mentions blockchain alternatives, such as directed acyclic graph (DAG).

Source: Bloomberg Tax

Bad example of virtual currency

The IRS's definition of virtual currency depends on its ability to "operate like a 'real' currency," meaning it needs to be freely transferable between users and easily convertible into fiat currency.

A spokesman for Imperium, publisher of Fort Night, told Bloomberg that none of the above explanations apply to game currency:

V-bucks cannot be 'used by users for digital transactions', nor can they be 'converted into U.S. dollars, euros, or other real or virtual currencies'.

A representative of Roblox expressed a similar position, but also pointed out that Robucks can be converted into fiat currency under certain circumstances. The company added that related transactions were automatically submitted to the IRS.

The revised official guide only mentions BTC, removing previous references to Ethereum (ETH), and the reference should have the same definition.

Radical position on cryptocurrencies

U.S. tax enforcement agencies have recently taken a powerful step to curb tax evasion using cryptocurrencies. Now, there is a simple problem in the 1040 table:

Have you sold, sent, exchanged, or otherwise obtained any economic benefits related to virtual currencies at any time in 2019. Categorizing gaming currencies as virtual currencies will cause millions of people to have to answer "yes". However, owning game currency usually doesn't make much profit.

Considering that fraud on the form could result in a fine of up to $ 250,000, this measure could be used to force cryptocurrency users to report their earnings.

Such a move can be quite complicated. For example, every cryptocurrency to cryptocurrency exchange is considered a taxable event that must be reported. Although some people hope that these transactions fall into the category of "similar transactions," an IRS official denied it , saying that the definition meant that cryptocurrency income would only be taxed when converted to fiat currency.

Cryptocurrency taxation is a topic that is not yet clear, as regulators around the world take a very different approach. For example, France does not levy taxes on cryptocurrency transactions.

But the US Congress recently introduced a new bill that could simplify the use of cryptographic payments by eliminating tax returns for low-value transactions.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!

Share:

Was this article helpful?

93 out of 132 found this helpful

Discover more

Opinion

Forbes Binance's Golden Touch, how did they turn failed ICO tokens into unexpected fortunes worth billions of dollars?

In this article, we will see a detailed analysis by Forbes of BNB's initial token issuance and the subsequent years' ...

Opinion

One year after the FTX crash, have the once badly affected market makers in the crypto world recovered?

Alameda Research is the core trading company of Sam Bankman-Fried's failed crypto empire, and after the company's col...

Opinion

Former close friend to testify against SBF, list of other witnesses revealed.

SBF's trial started on October 2nd, and his once closest friends will testify in court, becoming his biggest threat. ...

Blockchain

A new attempt at traditional finance, the technology of the Stock Exchange enters the currency circle

In January 2019, the London Stock Exchange Group announced a partnership with the digital asset trading platform AAX,...

Blockchain

Interpretation | FCoin Shutdown: A Quick Look at the Exchange's Death Stance

The content of today's interpretation is mainly divided into three aspects: The first aspect is the beginning an...