$******$

Scenario $10$: The Metaverse Muddle

A taxpayer becomes an early adopter of a virtual world platform:

Acquires virtual real estate hoping for appreciation.

Develops and sells in$-$game items $($NFTs$).$

Earns the platform's native cryptocurrency through various activities.

The taxpayer also mines other cryptocurrencies outside of the platform.

Has an NOL carryforward of $$25,000.$

Other Income:

Wages: $$65,000$

Interest & Dividends: $$800$

Itemized Deductions: $$19,000$

Allowable deduction for self$-$employment tax: None

Questions:

Discuss the tax treatment of the different virtual world transactions $($property$,$ NFTs$,$ cryptocurrency$).$ Is it capital gain, ordinary income, something else?

Are there unique reporting requirements for virtual world income?

How, if at all, does the NOL carryforward interact with these types of gains$/$income$?$