Over the past week, I’ve been watching my friends & colleagues chase little animated creatures around town, narrowly avoiding walls and cars. For those who don’t know how it works, players use Pokémon Go’s geo-location feature and their phone cameras to find virtual Pokémon in their area in real time and receive points. It’s amazing how Pokémon Go & augmented reality has become a “thing” in such a short period of time. As with many “things”, the IRS has decided to weigh in.
“If you receive more income from the virtual world than you spend, you may be required to report the gain as taxable income…when you spend more in a virtual world than you receive, you generally cannot claim a loss on an income tax return.”
Not exchanging cash? Swaps of goods for services or barter deals are taxable (unless it’s a like-kind exchange or for partnership and corporate formations). While it is taxable, a non-cash deal is harder for the IRS to find. I recommend consulting with your tax advisor. Now enough of this tax talk, time to get back to the game.