If you don't cash out any of your L$, does it still count as real money?

The difference in 1/2/3 and 4 is that they have a quantifyable value. #4 is essentially worthless except to the 2 parties involved. Which is the same as $L's which are even stated to be worthless in the EULA.

This is incorrect. 1, 2, and 3 demonstrate that when I give you a photoshopped image, it has value (you've given me cookies in exchange for it!). They also demonstrate that when I receive a photoshopped image, it also has value (I mowed your lawn in exchange for one). You've acknowledeged this, and I doubt anyone out there would argue otherwise.

The problem you and others seem to be having is making the mental correlation between those examples and the direct exchange of one photoshopped image for another (even via an intermediate "token". You're basically trying to claim that object A or object B (two different photoshopped images) can be exchanged for object C (cookies), and that transaction has value, but when you directly exchange object A for B the transaction has no value. Absurd.

And, for the record, it doesn't matter *at all* if LL claims in the EULA that the L$ has no value. If it's being exchanged for USD, they acknowledge the exchange, and actively *support* the exchange, then they can say whatever they like and still be wrong.

The problem you and others seem to be having is making the mental correlation between those examples and the direct exchange of one photoshopped image for another (even via an intermediate "token". You're basically trying to claim that object A or object B (two different photoshopped images) can be exchanged for object C (cookies), and that transaction has value, but when you directly exchange object A for B the transaction has no value. Absurd.

Are you saying then that L$ is an effective tax shelter?

What if, say next year, I decide to live off my L$ savings?

Does that mean I can pay in a lower bracket?

Well, I'm trying prove something by contradiction.

If we assume that we don't have to declare taxes on our L$, then that leads us to a lot of very interesting possibilities for tax evasion.

Since Tax Evasion is a contradiction, at least in the eyes of the IRS, I think it's reasonable to conclude that declaring our L$, when we have a lot of them, is probably a good idea.

Actually you have not proven anything by contradiction which actually isn't a way to prove something anyway. It is a way to dis-prove something, yes, but not prove.

You can call it "tax evasion" if you want but that doesn't make it so.

Well, I'm trying prove something by contradiction.

If we assume that we don't have to declare taxes on our L$, then that leads us to a lot of very interesting possibilities for tax evasion.

Since Tax Evasion is a contradiction, at least in the eyes of the IRS, I think it's reasonable to conclude that declaring our L$, when we have a lot of them, is probably a good idea.

Heh heh, Reductio ad absurdum is definitely a way to prove something.

And, even if it is was just for disproving something, just disprove the negation of something and you've proved that something

For example, if I wish to prove that is raining, I merely have to disprove that it's not raining.

Anyways..

It is tax evasion. Rather than claiming the income this year, I can stuff it away and then wait until next year when I'm in a lower tax bracket and live off the L$. It's called a tax shelter.

In canada, you're only allowed to do this with 13% of your salary or somesuch, and it's meant for retirement. With L$, I can do it with 100% of my salary.

Also, next year our income taxes will be lowered, so it makes a lot of sense to not declare my income until next year if possible.

Prak, I think this is referring to real money. Not virtual money. Blaze was asking if he should declare his game/virtual money.

I think that if you receive a large amount of money and you wanted to keep it a secret. I suggest a great place to store it is down your pants or under your bed. Anywhere but the internet. But if you received the money over the net, then its probably not a secret.

Right. While this might not be as useful Blaze I thought it might be useful information for others. It is also as close to an answer as I could actually find at the time. A better answer could be found by looking into how the IRS treats casino markers before they are cashed in but I was unable to find anything specific enough on the IRS's website.

Which you are not in this case because $L has the same value as this post to the message board. None.

Uh huh. If you really believe that, then I'll give you 1 USD for all your L$.

Great comparison. And you know what, there are 1,000's of casinos out there and believe me the government taxes your winnings from them!

So, I will make my claim: if someone can find an IRS snippet that states that uncashed "casino markers/chips/etc." are taxed then I will concede that $L in game should also be taxed. Otherwise, I claim that they should not be. (Not a proof, just my claim.)

Actually, I have a significant amount of money locked up in L$ and I could save myself about 1000$ USD in taxes if I don't dump it into my paypal account until january 1st.

I suspect there are a lot of people in a similar boat.

Great comparison. And you know what, there are 1,000's of casinos out there and believe me the government taxes your winnings from them!

So, I will make my claim: if someone can find an IRS snippet that states that uncashed "casino markers/chips/etc." are taxed then I will concede that $L in game should also be taxed. Otherwise, I claim that they should not be. (Not a proof, just my claim.)

Yeah, I agree, that would be a good precedent.

If you think of the Linden as somewhat like a stock, the IRS seems to think that worth is assigned at the time it is sold.

http://www.irs.gov/faqs/faq-kw185.html



Of course it is quite likely that being handed stock would be treated differently than a stock split.

if someone can find an IRS snippet that states that uncashed "casino markers/chips/etc." are taxed then I will concede that $L in game should also be taxed.

I'll offer $L1,000 to the first person that can find a definitive answer on the casino chip tax question one way or the other.

Global taxing in SL is impossible - and there's good reasons for this...

Anyone in the world can 'play' in a 'game' (not getting into that debate again) like SL, but 'the taxman' is local only to a single country. Someone in the US earning money and being taxed on the earnings would be having to pay tax whilst someone else in Europe or Asia or wherever would not. Any worldwide agreement to tax on currencies held in a virtual world is going to be nigh-on impossible - or it at the very least going to take many, many years for them to agree upon. World peace would be easier

Therefore the only way for the US taxman to collect money from the entire population would be to force LL to collect it (as LL fall under the US jurisdiction), but this is in itself unworkable. I should think quite a few governments are going to feel their noses have been put out of joint by the IRS collecting taxes from non-US residents that they're not entitled to (or at least, that the other governments think they're more entitled to).

This leaves the only option available - that the IRS may decide to collect taxes from those who reside RL in the US, but that's as far as it goes. The rest of us may avoid it until our respective governments pick up on this.

HOWEVER, the chances of those governments bringing in provisions for taxing virtual currency is pretty damn small - the very cost of implementing/rewording the laws and administering the collection of these taxes would probably outweigh the profits to be gained from it by many times. It would simply not be worth their while (at least at this stage). And let's face it - who can honestly say that they think the government of their country is future-thinking enough to make provisions for this kind of thing until the issue is much, much larger?!