Lawmakers Trying to Head Off Massive Taxation

An anonymous reader writes to mention a Reuters article about a lawmaker's attempt to stop the Government's interest in taxing Massively Multiplayer Game content. R-New Jersey Jim Saxton is cautioning against exploring the taxable status of in-game items. From the article: "'The goal of the forthcoming Joint Economic Committee study is to help lawmakers understand the issues involved and head off any premature attempt to impose a tax on virtual economies,' he said. Under current law, Saxton said if a transaction takes place solely within a virtual world there is no 'taxable event.' Dan Miller, chief economist for the Joint Economic Committee, said earlier this week that the committee's study would start with a blank slate and be completed by the end of the year."

Comments

so, does this mean I can deduct

[way2trivial]

-my internet connection, my computer purchases, software purchases, etc???

Actually, yes, you can deduct them

[davidwr]

IANAL and IANA Accountant, but I believe if you "make money" off of a hobby, you 1) have to declare the income and 2) can deduct the actual expenses.

Making money by monetizing game assets is no different than making a profit by buying and reselling items on EBay. You generally get to deduct costs that are 100% related to your hobby/business such as subscription fees, and make partial deductions for costs that are partially used for your enterprise, such as your computer, subject to limits set by Congress.

If the IRS determines you "labored" to create your virtual world before selling it for US Dollars, they may also hit you with self-employment, Social Security, and medicare taxes. On the bright side, you can open up a self-employed IRA and enjoy other benefits of being self-employed. In the eyes of the IRS, that big island full of stuff is no different than the quilt your mother made from raw materials then sold for a profit on E-Bay.

Here's where things can get tricky with respect to the IRS:
If you barter assets in-game, they probably won't be taxable. But if you barter for a real-world asset, or an asset in another game, they may be. The IRS taxes barters, particularly barter-for-labor or barter-for-fruits-of-labor, as taxable events, just as if the items had been bought or sold for money. Appraising the value of an island full of stuff in one game that you trade for a similar island in another game can be tricky, much like trading two old, collectable manuscripts or paintings.

Ridiculous

[festers]

According to Blizzard, I don't own anything inside of the World of Warcraft. Why the hell would I be taxed on property that belongs to someone else?

It's like taxing for sex

[ConfusedSelfHating]

Your wife or girlfriend's body is not for sale. However there are some people who would pay money to sleep with her. Only losers use prostitutes, but it takes bigger losers to pay real money for online equipment and characters. The fact that you have no intention of paying for it doesn't matter. It only matters that somebody would.

Re:Let's "have a chat" with these guys next electi

[crunch_ca]

Who do I vote out of office? Give me a f-ing ballot. Who do I vote out of office? Gimme a name. Gimme a name!

I know this is off topic, but I think the voting system should be changed so that you can cast negative votes. Basically, you don't care who gets elected as long as it's not X, so you cast your negative vote for X.

Re:No value?

[Mark Maughan]

Money isn't real, it's a social contract. The estate tax is an economic corrector that prevents the growth of an aristocrat class that is forever rich and never has to work. Wealth accumulates without work when interest is better than inflation. It is not fair to get an infinite amount of reward over many generations from a finite amount of productivity over a few generations. Society doesn't have to foot the bill for Paris Hilton's lifestyle just because her ancestors were productive. It is neither beneficial to society nor fair.