Virtual land in Decentraland, Sandbox, and other metaverses is taxable property. Buying, selling, and earning income in the metaverse all have tax consequences.
Virtual real estate - land parcels in Decentraland, The Sandbox, Otherside, and similar metaverse platforms - is property for federal tax purposes. Buying it, selling it, developing it, and earning income from it all create tax obligations that the IRS will eventually enforce.
Purchase and Sale
Buying virtual land with cryptocurrency is a taxable disposal of the crypto used. Selling virtual land produces a capital gain or loss based on the difference between your sale price and your basis (what you paid). If you bought a Decentraland parcel for 10,000 MANA when MANA was $3 and sold the parcel for 50,000 MANA when MANA was $1, the tax calculation requires converting both transactions to USD at the time they occurred: you spent $30,000 and received $50,000, producing a $20,000 gain.