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Are Fortnite V-bucks Taxable?

The world of virtual currency is looking less like the Wild West these days. Once hailed as the crowbar that would finally pry banks from online transactions, cryptocurrencies like Bitcoin are being hoarded by corporations with the resources to efficiently mine them more often than not.

That hasn’t stopped enthusiasts from sinking money into their glittering digital investment—Bitcoin’s fluctuating value is believed to have minted new millionaires, after all. But as with any new financial development, the IRS is tasked with making sure taxpayers pony up what they owe.

Enter the IRS.gov page on virtual currency.

Built as a resource to help taxpayers properly report their virtual currency holdings and transactions, “Virtual Currencies” answers important questions:

  • What is virtual currency?
  • What are the tax obligations associated with virtual currency?
  • What IRS publications and notices deal directly with virtual currency? notices.
  • A recent change to this page cleared up some confusion that was directly related to currencies used in some pretty popular video games.

    What is a convertible virtual currency?

    The IRS explains that “virtual currency that has an equivalent value in real currency, or that acts as a substitute for real currency, is referred to as ‘convertible’ virtual currency.” Bitcoin is their go-to example: “[It] can be digitally traded between users and can be purchased for, or exchanged into, U.S. dollars, Euros, and other real or virtual currencies.”

    That seems pretty straightforward.

    Unfortunately, the IRS listed Robux and V-bucks alongside Bitcoin and Ether as examples of convertible currencies, leading taxpayers and tax professionals to collectively scratch their heads: V-bucks and Robux can only be traded within the game world for in-game items and services.

    Are Fortnite V-bucks and Roblox Robux taxable?

    The IRS agreed with critics, removing mention of the video-game currencies from the page and issuing a statement: “The IRS recognizes that the language on our page potentially caused concern for some taxpayers. We have changed the language in order to lessen any confusion. Transacting in virtual currencies as part of a game that do not leave the game environment (virtual currencies that are not convertible) would not require a taxpayer to indicate this on their tax return.”

    Parents across the country can breathe easy: Junior’s stack of V-bucks aren’t going to result in a visit from IRS auditors any time soon.

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