Gambling Winnings
All gambling winnings trigger a TAXABLE EVENT regardless if you received a form W-2G or not.
For example, if you receive a $100 worth digital currency as a gambling winnings, you will pay taxes on that amount as ordinary income.
Gambling Losses
As stated by the IRS, "you may deduct gambling losses only if you itemize your deductions on Schedule A (Form 1040) and kept a record of your winnings and losses. The amount of losses you deduct can't be more than the amount of gambling income you reported on your return. Claim your gambling losses up to the amount of winnings, as "Other Itemized Deductions."
For example , if you have gambling losses for $80, you can deduct $80 on your Schedule A, Itemized Deduction. Now if you have gambling losses of $125, you can only deduct $100 as you are limited to only deduct as much as you have won.
Gambling Income and Losses
Capital Gains and Losses
For example, if you disposed of the above-mentioned digital asset you obtained from your gambling winnings ($100) WITHIN A YEAR OR LESS, let us say for $110, then you will have SHORT-TERM GAIN of $10. Should you sell this digital asset WITHIN A YEAR OR LESS, let us say for $85, then you will have a SHORT-TERM LOSS of $15.
If you disposed of this digital asset ($100) in a time frame that is GREATER THAN A YEAR, let us say for $110, then you will have a LONG-TERM GAIN of $10. Should you sell this digital asset in a time frame that is GREATER THAN A YEAR, let us say for $85, then you will have a LONG-TERM LOSS of $15.
