How will Gamestop Power Packs income be reported on taxes?

JoshuaZ
JoshuaZ Posts: 1 Newcomer
in Filing my taxes

I have been buying packs online for Pokemon cards. When you buy a pack you get a random card that could be worth either less, equal, or more of what you paid. Once the card has been revealed you can either hold the card in your PSA vault, ship the card or sell it back with the instant buyback option. I have been using the instant buyback option to buy more packs. Some have been for a loss and some have made money. Would it be considered gambling income and losses or capital income and losses?

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Answers

  • MatthewD
    MatthewD Posts: 1,030 image
    Hi,

    This is a really good question. The cards are classified as "collectibles," and trading and selling them follows specific tax rules. Since you are actually buying a collectible, the profits and losses are treated as capital income and losses.

    Report the income and losses in the Investments and Saving section by reporting the purchase/sale as an investment.
  • Liamdemitri
    Liamdemitri Posts: 6 Newcomer
    https://community.freetaxusa.com/discussion/comment/8289#Comment_8289

    One additional question to this, would this mean your deposits to the site and withdrawals net your gain/loss?

  • MatthewD
    MatthewD Posts: 1,030 image
    Hello Liamdemitri,

    It is sort of like that. Let me explain. Depositing money into your account is not a taxable event. It is placing money in your "wallet" or account. When you buy the online cards, that is a taxable event called a purchase. Taking withdrawals is also NOT a taxable event. That is only taking money out of your wallet or account. When you sell an online card, that is a taxable event.

    Here is the formula you need to use: (Sales - purchased = gains/losses). Use the "Investment and Savings" section of the FreeTaxUSA software to report an Other Sale. You can consolidate all your purchases and sales for the year to make one entry for that one online account.

    We recommend that you contact Customer Support for help while signed into your account.
  • GregW
    GregW Posts: 17 image

    I think there is still debate over whether these "loot boxes" constitute gambling. Some foreign countries have ruled that they are. I don't know of a U.S. Court that has ruled that way, but there is still litigation ongoing.

    See https://ag.ny.gov/press-release/2026/attorney-general-james-sues-game-developer-promoting-illegal-gambling-through

    https://houstonlawreview.org/article/154451-if-it-walks-and-talks-like-gambling-it-s-probably-gambling-how-popular-video-game-loot-boxes-likely-violate-texas-gambling-laws

    https://natlawreview.com/article/legality-loot-boxes-primer?ref=blog.promise.legal

  • MatthewD
    MatthewD Posts: 1,030 image
    Hi GregW,

    Thanks for sharing the news. For the time being, I think this can be treated as a collectible. So capital gains would be appropriate. If the courts decide this is a form of gambling, then we will likely need to wait until the court cases are final.
  • Liamdemitri
    Liamdemitri Posts: 6 Newcomer

    If taxes are filed for 2026 as a collectable with capital gain/loss and later that year it becomes a gambling classification, does that mean all those filings are incorrect or are they protected under the current classifications regardless of any are classification?

  • MatthewD
    MatthewD Posts: 1,030 image
    Hi Liamdemitri,

    Generally speaking, when a law is passed it takes effect in the following year. So, until that happens you would be safe to file the collectible as a capital gain.

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