MSN News: IRS taxation of online game virtual assets inevitable

Anyone see this?:
http://tech.msn.com/products/article.aspx?cp-documentid=1392930&GT1=8902

Be sure to read the 2nd page as well LOL.

Not 100% sure how it will work for overseas players though, as although we are in some ways subject to US law by the nature of SL having its home in California, I pay enough tax to the government of my own country without having liabilities from elsewhere.

Perhaps this will be the eventual issue that forces Linden Lab to stop allowing unverified accounts in-game.

Lewis

Exactly....taxation without representation and all that

So does that mean that, if you aren't registered or otherwise eligible to vote... you shouldn't pay taxes either?

Lewis

Old news already:

/327/f5/152661/1.html

Oops!
MSN just put it out today and that's the first I had seen of that article. LOL.
Thanks Peekay.

Absolutely, any income should be taxed and will eventually. Do you think LL is taking a deduction for the money they pay out? Absolutely! Therefore there needs to be someone claiming the income.

In my opinion SL is more of an investment than a business and can be treated the same way as Wall Street.

If I buy $L1,000 for $4.00 and I am able to turn that $L1,000 in to $L10,000 and then I cash out for $40. I now have $30 TAXABLE income, however, I would argue that it is a Capital Gain and not ordinary income, which makes a difference.

I can do the same thing with Euros, Yen or Canadien dollars. It is all the same.

Ugh. You know what I meant.

Niether the U.S. Government nor California has established a jurisdiction within a virtual world. The virtual world itself is not physical in the same sense the boundaries of the jurisdiction for which these two governments normally operate under. The location of Linden Lab itself is still not an acceptable origin to state where the jurisdiction falls. The virtual as it exists is more like non-domestic government.

Taxation must have the jurisdiction in place first for which the taxation represents. If the government were tax in-world transactions, they would be in error due to the fact there is no jurisdiction or operation to represent that taxation. Being like non-domestic government, the only legal taxable event is the transfer of in-world currency to U.S. currency.

If you transfer money from in-world currency to another currency besides U.S. currency, it would not be a taxable event of the U.S. currency.

This makes absolutely no sense.

There's no reason the Gov't can tax "virtual assets" because we don't own a damn thing. We're renting LLs servers. Sure, certain rentals have great value.... however there is absolutely no ownership among SL users. We don't own anything.

They are soon going to realize they can only tax real world profits. If we actually had any virtual assets, there'd be something to tax.

The income from this game should be treated almost identical to the laws that tax gambling. If you put in money, you should not be taxed on it, but you should however be taxed on any significant amount that you CASH OUT with. This is taxable income. They should however NOT be able to tax ANY L$. Until it is transfered to US currency.]

However, this is not the part that I am worried about, just wait until they try to do something about the in-game gambling....

Being in the game is gambling... with addiction! I gamble when I buy a new designers clothes

this is what I think the outcome will be as well.... I don't think it relates to gamgling, but it does relate to any business income or expense. true that US taxes 'assets' such as property or any substantial ownership of something.... but even though we create virtual value in SL and we make lindens$ and make land deals and buy and sell things, these are all not real ownership.. its not ANYTHING.... it's nothing until we cash out. When the real world income is made, that's when income is made. LL owns the servers, let them pay the taxes on it.

What the hell do they think they're gonna do, the IRS will give my avatar an audit? and I'll give them access to look at my transactions log and inventory?? what the fuck do they think they are.... yeah, they're the US govt, but if they say, yeah, you've bought land and money in a video game... I can't wait to crack up at them!

I mean, ive beaten Grand Theft Auto Vice City.... am i gonna have to pay taxes on Tommy Vercetti's house?

IT WILL NOT BE TAXED AS A BUSINESS!!!!

it would be way to hard. It will probably be taxed the same way as if you bought and sold Euros or any foreign currency.

That would be the only legitimate way to tax anyone with a "gain" which IS NOT virtual because you would be getting REAL money put into your bank account when you sold.

LL would have to shut down SL if everyone was taxed as a business because of the cost of recordkeeping.