OT: Real taxes on activities in Virtual Worlds!

[gunug]

Because people have been silly enough to exchange real money for things in the virtual world of these games they have a real value which the ravens of the IRS might want to collect taxes on:

http://taxprof.typepad.com/taxprof_blog/20...reatment_o.html

A friend of mine is involved with a lady who makes outfits and such for avatars in 2nd Life and apparently tax law is evolving to make sure they put a ring in her nose over it!

[krissel]

If hard currency is exchanged the IRS has a right to be involved. But many of those games forbid cashing in to real money.  If this "income" is taxed then the attending expenses are deductable, this would make for one heck of a 1040.

The creators of these games should develop a virtual government that would 'tax' the sale and exchange of virtual items and pay our Federal government in virtual cash.

[Gregg]

She could always accept payment in virtual money.

[tacit]

Second Life as always advertised itself as a "real" economy, and people make real money in it; Linden Dollars, the virtual "money" used in Second Life, is freely exchangeable for real US dollars.

Therefore, Second Life is a legitimate revenue source in real money for people who sell goods and services over the system, and taxing it is just as appropriate as taxing the sale of any other goods or services.

World of Warcraft money can not be exchanged for real money (people buy in-game virtual money from cheaters, but there's no way to turn the virtual money back into real money, and Blizzard shuts down the accounts of anyone caught cheating by buying in-game money), so taxing WoW money makes less sense.