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When Tax Day Comes to Azeroth
1up is running a short piece originally from Games For Windows: The Official Magazine. It discusses the inevitability of taxation coming to virtual worlds, and a little bit about what that might mean in the indeterminate future: "Taxable income includes everything from tangibles like cookies to more ephemeral and subjective things like works of art, concert tickets, or advice. Those big, scary books that most sane people pay accountants to understand for them don't really narrow down what counts as taxable income so much as meticulously define it as damn near any piece of matter, energy, or information that should happen to pass into your possession over the course of the year. That goofy World of WarCraft gnome that GFW editor-in-chief Jeff Green's been leveling isn't any more intangible than, say, stocks."
Suppose i pay for my mmorpgs with game cards and use proxies to connect tot he game servers. how then can anyone be expected to track how much gold i have accumulated on my virtual d00d? I can see taxing the sale of virtual goods for real money (not that i agree with it), but it seems silly to expect purely in-game assets to be taxed.
With having tax collectors in the game that players can beat up and rob?
Just show them your EULA.
Blizz claims ownership of the items, thus it would be illegal for them to tax you on something you don't own.
Remember, you licensed it, you don't own it.
Tax time in WOW is stupid and will never happen. OTOH, Tax time in second life is a possibility.
As long as its one of 2 ways
:) (not to mention tax on electricity usage, network connections staff wages and all the other costs the company incurs, oh and on their profits if any)
1) VAT/sales tax on the subscription and game purchase - oh they already do this don't they?
2) On in game items that are bought and sold for real money - ie a commission on in game to real life transfers.
Anything else is just pure nonsense!!
$_="Slashdotter";$syn="OTT";s;..;;;sub _{print shift||$_};s!ash!Perl !;s=$syn=ack=i;tr+LLEd+BLAH+;_"Just Another ";_
The intangible gnome may be something ephemeral that comes in to my possession (in the sense that it is under my control) but if the analogy is to stocks, then wouldn't it make sense to be taxed when I cash out? I mean gains in the stock market aren't taxed until the stocks are exchanged for money and a capital gain is realized. The funny part really comes later in the discussion when people agree with the concept seemingly based on the idea that anything which causes joy should result in negative consequences.
more of the same on Twitter.
As soon as in-game wealth CAN be used as an actual source of income in the real world, I have no problem with it being taxed. :P
But as long as that "wealth" stays online and never gets exchanged for real money coming into my pocket, stay the fuck away from my ISK and T2 blueprint copies
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1) WoW players pay Blizzard for service and access to data on their servers. The ownership of said data never leaves Blizzard.
2) There is no clear market value for any individual item or character in WoW until such time as it is "cashed out" or sold.
Taxation will come to virtual worlds, but it would be supremely idiotic to think that it would be worth anyone's time or effort to tax anything but money making transactions.
Any other scenario would see incredible resistance from companies like Blizzard. It's a programming hassle to keep track of everything as is, and now they have to maintain financial records on every denizen of Azeroth?
Majordomo: Behold Ragnaros, March has come! Perhaps we should do our taxes?
Ragnaros: TOOOOOO SOOOOOOOON!!!!!
Thunderclone: ONE MAN ENTERS! TWO MEN LEAVE! ONE MAN ENTERS! TWO MEN LEAVE!
Despite that fact that every gamer site & mag likes to get all fud-tastic in regards to MMO taxes, let's use our brains for a second. The only time that a tax would be applicable would be if real-world money changes hands. Selling gold / items / characters for money? You'd get hit with a sales tax or have to report this as taxable income. It might "suxxors," but if you can make a living by gold farming, then I'd certainly expect you to have to pay your taxes, too.
There do exist people who have made a living off selling in-game items and money. Most people who have been able to maintain a living off this sort of "work" aren't really playing the game anymore, it turns into a job for them and they work at it just as hard as anyone else with more traditional employment.
They're the exception however, but I would imagine the beancounters don't care. They see money slipping past them, and will cast as wide a net as possible to try and halt it.
First of all, Blizzard would be in court the day any such ruling came down.
Second of all, if you legitimize the transfer of access to virtual property by assigning it real world value, you open it up to all the issues our money faces today.
Would you need some sort of FDIC-type entity to protect the guild bank? Guild leader gets keylogged, don't worry, your Epics are insured.
Repair bill insurance? Arguably your character is your main tool for earning. If he dies or takes damage while performing his function, the repair bills begin to stack up. Since insuring this guaranteed expense is unfeasible, can we write it off? What about the other built-in money-sinks? Arguably my epic mount is a sound investment towards future earnings. It will allow me to grind and gather more efficiently. Can I write off this 5200g expense? Can I write it off even if I've never sold virtual goods for real currency?
Credit? If I take out a loan from a guildie, and then I stall on paying him back, can he report me to a real world collector? Will it affect my credit score? I'm sorry sir, we regret to inform you that we cannot finance your home at this time. Apparently you have a large outstanding debt with xlegolasx. Would this spawn lenders and credit-issuers in game? "Mastercard, accepted at Auction Houses everywhere. Yes, even Gadgetzan."
I'm just saying. Tax people if they earn money from anything. That's fair, it's the law. But taxing people who don't have any intention on making money from their hobby would cause more problems than it's worth. Yeah, that still sums up the issues in my mind.
"By the time they had diminished from 50 to 8, the other dwarves began to suspect 'Hungry.'" -Gary Larson
Please! A share of stock is ownership of a piece of the company. It gives you the right to vote on decisions made by the board of directors, and it may entitle you to receive dividends based on the company's profits. There are limitations on a company's ability to issue new stock. These are the reasons why stocks are tangible and have value. Yes, your stock is probably just bits on server that keeps track of how many you own, but those bits represent actual ownership of an actual company. When someone buys my stock, they are paying for that ownership, not for the bits that represent that ownership. This is quite tangible.
Your gnome is bits on a server, and that's it. Those bits don't even represent anything in the real world; the bits are the entirety of the thing's existence. The server owners could delete those bits at no cost except your annoyance, or they could duplicate those bits so everyone on the server has three dozen exact copies of everything you own. If you can get someone to buy those bits from you, they are still buying nothing but bits. There is no connection to anything outside the world of bits, and hence the gnome is truly intangible.
I mean that's just silly. My bank account is just data on a server -- except that data represents very real, very tangible currency. Cash is no more tangible than your WoW character -- yeah right!
All this means is the same thing that it has always meant regarding taxation: The second my in-tangible, non-existent thing (my online gaming bits) is turned into something tangible (like a stock or wad of cash) then you tax it. How much do you value the bits at for tax purposes? The amount they were sold for. Simple. And we're done. We don't need a whole new section of tax code about the value of things that don't exist or even represent things that exist.
The enemies of Democracy are
I already pay Sales Tax on every item I sell in Eve in the in-game market. It's not my fault they don't forward the ISK to the appropriate authorities, any more than it would be if Mcdonald's didn't forward the tax on a cheeseburger.
I don't have a problem with virtual jobs for real money, and I don't have a problem with the government taxing that.
But then again, if that happends, I do expect the governments to FORCE the MMOG companies to acknowledge in-game property as actual, personal user property, and allow in-game assets "conversion" to real money at any given time (as per supply and demand from other customers, not from the game company).
However, the actual value of the goods should be set as "zero" for ownership taxes only, so that simply owning a piece of virtual wealth does NOT mean you have to pay something simply for owning it... just if you try to sell it.
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Heh, good one. Next thing you know, they'll increase sales tax to around 2% minimum and even 10% max without skills, and file tax returns for you. But then again, this would mean the EVE economy must first become a realistically modeled economy (bye bye sinks and faucets) before that even has a chance to fly. ;)
I'm looking forward to tax-deductible charitable ISK donations to newbies, and anti-monopoly real-life lawsuits for T2 BPO owners
By reading this signature you agree to not disagree with the post you just read.
The government can... you know... make laws. Some could make certain contracts illegal. So they can make laws invalidating those parts of the contract.... Especially since there might be money in it for the government.
Any guest worker system is indistinguishable from indentured servitude.
Why do we have taxes in the real world?
I would say that we have taxes to pay for the public infrastructure and the continuing operation of said infrastructure.
In such "virtual worlds" the infrastructure is all provided and operated by the company selling access to the "virtual world." In effect, your usage/subscription fees fill the same role as taxes do in the real world.
To the extent that the company that owns the "virtual world" also exists in the real world and makes use of public infrastructure, they must pay tax on their revenue, just like any other business.
So, if all of the above is true, just why is it inevitable for "virtual worlds" to be taxed by real-world governments?
When information is power, privacy is freedom.
Haven't we discussed this enough?
That's exactly how it works with stocks (except in the case of stock dividends), and that's pretty much what they're talking about.
You can't assess a value on an item in a game without that item having been converted into actual currency...The markets fluxuate too rapidly.
ad logicam Claiming a proposition is false because it was presented as the conclusion of a fallacious argument.
Oh you did read the EULA, right? Blizzard owns the characters, money, likenesses of items, etc etc. We'll never have to pay taxes on things we don't own. We pay sales tax for the game, and the time cards if you use them. If you make a living selling gold/characters on ebay, aside from being against the EULA, that's a different story. Do enough of them and you probably qualify for a business. In which case, your might list your WoW accounts as assets.
Simply put, the average John Q Public WoW player has nothing to worry about. When you play for a while and sell your account, you have nothing to worry about Tax-wise (aside from being against EULA).The Second Life players, that might be a different story.
First of all, in the US illegal for-profit activities are taxable. Al Capon is the example that people usually use to prove that point. And don't forget that most illegal imigrants who work here illegally pay taxes (they don't have a choice but to sneak around INS, but they wouldn't mess around with the IRS). Second of all, violating a contract is not illegal. It simply exposes you to a lawsuit for the damages the other party has suffered due to nonperformance. So Blizzard can sue you... but mostly it just doesn't have to honor its contract and keep your character around anymore... so they erase characters that do this. Oh, and drug dealers are often wiped out just so... through tax codes. I am not a lawyer.... but I read the paper.
Any guest worker system is indistinguishable from indentured servitude.
why was this worthy of being posted to /.? there's no way in hell we would ever be taxed for looting 50 silver off of a dead zombie or whatever...unless i can claim my characters as dependents i think people would give the gov't a big fat middle finger. hell i'd buy multiple accounts and fill the character slots just to get the deductions.
"...if you don't like your job, you don't strike. You just go in every day and do it really half-assed..." -Homer
So, Blizzard owns your account. You own nothing, therefore, they'd have no reason to track sales. Now, a company like Linden, on the other hand, wouldn't have that loophole.
Build it, and they will come^Hplain.
If an asset is important enough to be taxed, than it must be of enough value to be considered an item of value in the civil and criminal courts.
But seriously... Hands off my gold!
-jX
Don't you just love politics? It's like a comedy of errors.
Hey, look on the bright side, at least you can sue WoW for paying you below minimum wage. Oh, and look at the state of your home: ~*~OSHA violation~*~! Ca-ching!
Apology to Ubuntu forum.
I skimmed throught the comments and saw a lot of "Blizzard owns the data not me" and "they can't trace my character to me" replies. I'm pretty sure that when this finally goes through the license agreements will be changed and accounts will be tracked differently to compensate for the new laws.
I hope as much as the next gamer that something like this never goes through, but when I sit back and try to think realistically... it's really only a matter of time. Maybe enough money hasn't changed hands yet, or the right guy hasn't seen the potential yet, but sooner or later it/he will.
Maybe a better response from the gamers would be, not, what can we do to prevent this, but what could we get the government to do with a portion of that money once they have it. It's only realistic and fair(I'm trying to be optimistic) that if part of the National fund comes from gaming that part of it be returned to gaming.
There already several "virtual worlds" that exist, and have existed for decades, that have not been taxed and will not be taxed in the future.
Number One(and most obvious): The Game of Monopoly. It too has a purely virtual currency, people have made millions playing it, yet there is so far, and there will always be, ZERO taxation.
Number Two: Any casino. You convert your money to chips, play with chips, make millions, lose millions, and don't generate a cent in tax liability until you convert back to "real" money.
There's also plenty of argument about whether or not "real" paper money is actually money, but that is another arg...
Good judgement comes from experience, and experience comes from bad judgement.
- W. Wriston, former Citibank CEO
..does that mean that I can write-off the subscription fees? and computer power consumption? It's no longer a game, it's a small business!
Nothing to see here, move along...
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
Taxes apply to real world currency. So they can tax the software purchase (at the store) and the subscription fees (since they are real $$) but there would never be taxes applied to in game transactions unless real world currency is connected (like the Gold-Farming and Power-leveling services). If a user happens to sell an account that would be taxed to but the question is whether violating the TOS by using one of these services (For WoW its a violation of the TOS to use a bot, Powerleveling service, or sell accounts) would become punishable in a real court as its a "secret" transaction. That would create a whole new virtual black market.
Running from the law definitely wasnt as easy as they made it look on the Dukes of Hazzard --Joy, My Name is Earl (2006
Great, as if I needed another group to grind rep with, now I'll have to get full Exalted with the IRS to get a tax break.
Never pay taxes again! Just play MMOs a lot! And collect EVERYTHING you can find.
> it would be illegal for them to tax you on something you don't own.
They are taxing the income, not the asset. If I sublet my apartment, I can be damn sure the government will tax that income.
Done with slashdot, done with nerds, getting a life.
Stop already. The "scare the geek" thing with taxes is a horse that's been beaten long past hamburger.
Yes, it's probable that eventually if you are earning a REAL-WORLD INCOME from selling things in a virtual game world, you'll be taxed on it, like you will eventually be taxed when selling crap on ebay.
But of course the "teaser" text never says that, they make it sound like there's going to be a lvl 100 Elite Auditor in every game watching how many coppers you make selling rabbit corpses.
-Styopa
If the government were to consider my income generated by gaming as taxable income... then I must be allowed to consider the monthly fees as a business expense as it was an expense incurred in pursuit of that income.
Of course, that would mean that I must start a business in order to game online... and of course my computer then becomes business equipment... oh and I'm a horrible gamer, so I'll never be profitable... so eventually my gaming business will file bankruptcy... they will take my old gaming rig in the settlement, pay off my overdue internet bills, and I'll do it all over again!
Sometimes the best solution is to stop wasting time looking for an easy solution.
There are only two things in this world that you cannot escape: taxes and the wow graveyard
If you look like your passport photo, you're too ill to travel. - Will Kommen
Tax all the out of game transactions for real money at %100. That way the government will have a good reason to help Blizzard catch the gold farmers other similar troublemakers.
I often don't like the choices people make, but I like the fact that people make choices. That's why I'm a conservative.
You've heard the likes of Steve Forbes say that a flat tax would work wonders for the U.S. Why not use a virtual world setting to test it out? That is, have a virtual world where there is progressive taxation, and another where there is flat tax. Then, measure the effects. I mean, why not use virtual worlds to test out various economic theories?
What those who want activist courts fear is rule by the people.
So long as you just gift gold to n00bs with level 2 characters and never accept Real World cash for it, you have not created a taxable event.
...
Now, on the other hand, gold farmers and others who sell MMORPG assets for Real World money and goods are creating and participating in taxable events.
Here endeth the lesson
-- Tigger warning: This post may contain tiggers! --
If you receive "real-world" income for your MMO loot (i.e. eBay), than of COURSE that is taxable income, just as much as tips for juggling on a street corner are taxable income. If you never get money for the loot, and the trading of loot for eventual real-world income is not a business of yours, then it is not taxable.
.pdf file, but you have received money for it. The sale of the items are most certainly taxable.)
For example:
Not taxable: I kill a Super-Mega-Nasty-Dragon and loot the epic Item Sword-of-Greatest-Butt-Kicking. I use it to slay more vitual things, and eventually get bored and let my account lapse, I have no taxable income. Since the TOS doesn't actually allow the sale of virtual items on eBay, my item theoretically has no value, and I have received no money for the worthless item. This is no different from (from a tax perspective) from taking a $5.00 canvas, $1.00 of paint, and making a masterpiece worth millions, but hanging it up in your living room until it falls apart.
Taxable: I kill the aforementioned Dragon and sell the sword on eBay. I have now sold something and received money for it. It now has a value (because I sold it), and that income is taxable, but I could possibly deduct my monthly payment, bandwidth bills, etc., according to the normal (extremely complicated) rules for deducting business expenses. Even if though the item is not physically tangible, you have essentially performed a service for somebody (by obtaining the item so they didn't have to), and they have paid you real money for it. (Similar example: You sell 500 copies of "eBay loot-selling secrets" for $5 each. The item consists of nothing more than a
Maybe taxable: I buy the sword off of eBay, and trade the sword with somebody else for an item that goes for more money on eBay. Is that taxable? Maybe. If you make a business off of selling items on eBay, it just might be. Barter is just as taxable as cash transactions. (Although harder to compute.) If you are just a player executing a trade for something nicer, and don't sell stuff for cash, I'm going to have to say that it probably is not taxable. You are trading an intangible item with somebody else. You never receive cash money for it (or any other item), it isn't a tangible object, I don't see the income.
The IRS will eventually have to write rules on this for the "Maybe", but I don't think they will affect the vast majority of players. No cash money for items, no taxable income, and almost everybody lives happily ever after.
SirWired
It doesn't matter if you own it or not - this is income tax, not property tax. If you receive a good or service in exchange for another good or service, then it is possible that it could be taxed as income. But I really don't think that is going to happen. The motivation for the complex definition of income is to prevent people from sheltering *large* increases in wealth by receiving the payment in a form that does not fit the regular definition of salary or capital gain. The IRS and congress couldn't care less about the piddling trade that is taking place with-in virtual worlds, because it isn't being used as a tax shelter. All they care about are the people that are receiving real world income providing a service to gamers (gold farmers, item crafting, etc).
nuke second life....get it fucking shutdown..it's nothing but a bane to our existence in every way. No one gives a fuck if some small group of people is trading gold for $$$ on WoW. The real problem is this stupid ass SecondLife thing that people pay INSANE amounts of money for completely virtual CRAP. WTF? Then all they really do is fuck around, literally...no socially redeeming value to SecondLife...its useless. Get rid of it before we get taxed because of it!
Sure, but my epic gear is on my character and soul bound, I can't sublet it. I draw no income from owning said gear(which as we have established via the EULA, I do not actually own). In fact, if they really wanted to tax me on it, they would end up owing me since my Wow habit is a total loss. In which case I would deduct my monthly fees for my account, the electricity to run my machine for the hours I played that year(statistics which are easily obtainable), then theres the matter of the costs of my internet connection. How about depreciation? The gear I got a year ago is not worth the same as the gear you can get today. Do I get to claim deprecation losses? They can't have it both ways. If you want to tax my virtual possessions, make sure that I am actually gaining income otherwise I get to claim it as a loss.
as a big loss?
If not then this WILL KILL OFF WOW and other games like it as people will not want to pay taxes on stuff and they can't sell with out taking a risk of losing it all even if you are just sell what is needed to pay the tax bill.
> If you want to tax my virtual possessions
I just got through saying that that's precisely what they're not taxing. Pay attention, son.
Done with slashdot, done with nerds, getting a life.
Hm. Wouldn't they only have to pay on the profit they made if/when they sold them?
I think this is really how the 'taxation' in online games is going to end up working. It's like stocks right now. If I go and buy stocks (with my post-tax income), I don't pay any taxes on the appreciated value of those stocks until I go to sell them. Then, the year I sell them, I have to go back and figure out what I paid for them, to establish the cost basis, and compute the capital gain.
I don't see why a +20 "Sword of Toestubbing" would be any different. Assuming you pay for it using a virtual currency that you bought using post-tax income, it's just like a stock. When you go and sell that, the income that you derive from the sale is taxable as capital gains, and if you want to avoid having 100% of the sale price taxed, then you need to go back and establish what the cost basis was of the investment.
IMO, the IRS doesn't seem to care too much about non-cash investments until you go to sell them. You can buy a stock, and that stock can split, reverse-split, do all sorts of stuff. It only becomes an issue (setting aside dividends) when you turn it back into greenbacks.
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."
I see 2 huge holes in this.
First, in games like wow buying and selling gold/items/characters for real cash is against the policies of Blizzard. So technicaly it has no value to the consumer. Its all property of Blizzard.
Second, if you are going to tax me on what I have earned in a virtual world, then you are going to give me tax credits for what I lost along the way. What if Im a bad player that plays alot, but at the end of the day have nothing to show for it? At the end of the year of fees, a person could spend $180.00 for a character thats non sellable. Is that a tax write off?
Third, Is a character worth $1000.00 a finiacial loss when it gets banned? or the subscription lapses? What if every november I cancel my account and then renew it in January? As of dec 31, I dont technicaly have that account.
There is no way this can be managed. what if my character is on a server outside the US? What if im outside the US?
Im a gamer, not a grammer major. This post is full of spelling and grammer mistakes.
I'm going to be the first one to level the new accounting profession to 375 so I can handle peoples' online tax forms! I'll be rich! I'll have to get some investors so that I can offer advances on expected refunds and I can charge huge interest rates! Look for my new office in Org...
However, I can see that the game companies would want to lobby very heavily for the distinction to be drawn between income from selling virtual property (albeit against the game's EULA, therefore reportable on your return in the box for 'embezzled or other illegal income') and the virtual property itself as a capital gain. If Congress goes for the quick but ill-considered solution, they will pass a law that makes the acquisition of this virtual property taxable on the premise that it is something of value that can be sold for profit. However, by the game's EULA, all of this virtual property belongs to the game company, which means that your acquisition of virtual property would represent a taxable capital gain on the part of the game company, not you. Consider what it would mean for Blizzard to get hit with a capital-gains tax on the grey-market value of every item that all of its subscribers managed to acquire in a year.
If the government decided and declared, once and for all, that it would not tax in-game virtual transactions, people could start using MMORPGs to hide real-world profits.
One might sell a million dollar house for $900K and $100K of in-game gold, where that $100K is the amount one would have otherwise taken as real-world profit. So no real-world taxes (or maybe even a loss), and one has in-game assets that can be used to pay other tax-cheats. Few of these tax cheats would take their real-world money out of the game - since they'd then have to pay taxes - but so long as there's a stable rate of exchange, and they can exchange in-game money for heavy real-world discounts on real goods, they don't care.
And of course, since the game isn't a bank, it doesn't have the reporting requirements that banks have, meaning that it'd quickly become the favored medium for black market transactions - financing drugs and terrorism and worse.
Which explains why we will keep getting these scare stories - the government wants to keep the whole mess from ever developing, so they don't have to actually engage in the messy practice of deciding how to tax virtual profits. But eventually - probably due to movement of drug money via MMORPGs - they will have to figure out a policy.
Probably it'll be fairly reasonable - most ordinary players won't ever be bothered. MMORPG companies will be required to report any people trading "gold" worth over some black-market amount, and some subset of those people will eventually find themselves being audited, and the dollar value of any real-world benefits gained in exchange for game gold will be taxed and fines assessed.
I forgot to write off the 2 MMORPG accounts i closed last year :(
You are suppose to pay taxes on things that you buy on the internet. There's a little box on your California state tax return(if you live in California) where you put the amount of money that you spent on untaxed web purchases. How many people fill that box in? How many people are going to report their income from selling virtual items?
Read my short stories - You won't regret it.
Because the value of a stock is intermediary, you're not taxed on that value until you sell it. Until that point, you've got this thing which could be worth quite a lot, or it could be worth nothing once you sell.
Same with gold / weapons / other virtual items. They have value that fluxuates rapidly, and your $500 sword of ultimate evil might be nerfed down to a $10 sword of I-remember-when-that-was-good. Same concept... you don't pay on value until that value is secure.
Also, Blizzard might have something to say about all of this, as nobody owns anything in WoW except for Blizzard. This is both by regular law and by the contract you enter with to play the game. Which is to say, those transactions online for real money might be legal (though against your TOS), but they don't transfer ownership, just temporary stewardship.
The ______ Agenda
I remember hearing of a court case a while back where someone was suing for stolen online property, or property lost on a server, or something of that notion, back when Everquest was the popular mainstay. I don't know if the plaintiff succeeded in the case, but if such a case passed it would say that there is legal grounds to give monetary (real world) value to these objects, and as such that gives countries the basis to tax these objects.
However while there is a "basis" for the argument, the only way it can be taxed is if there is a transaction.
Another case for the debate is Second Life, where real dollars are traded for real estate and their own currency (Linden dollars). It's a place where people legitimately manufacture and sell things like clothing, works of art, games, buildings, etc. Some of the things people make are pretty nice, too. The point, though, is that there are some people who actually make a living solely by making goods for sale in Second Life. In this case, taxation is an issue.
Parse it any way you want, but he's still right. And you should read his post again; he's not talking about virtual possessions as assets, he's talking about virtual possessions as income. It's kind of like money, it can be considered as either an asset (e.g. the money you have in your wallet right now) or as income (e.g. the difference between what's in your wallet tomorrow and what's in it right now).
Except, unlike money, virtual assets don't exist. They have no intrinsic value. Plus, as pointed out, if the government is going to consider that +5 singing sword of orc death as income, that +5 singing sword of orc death has to be something you have possession of, even if only virtually. You don't. Blizzard does, and they make that clear in their terms of service. Any time that they want to, they could simply *poof!* make that sword disappear, transfer it to someone else, or give everyone a +5 singing sword of orc death. You have absolutely, positively no legal claim to that +5 singing sword of orc death whatsoever, neither as an asset nor as income. Thus, it cannot be taxed, period.
Now, if you put that virtual +5 singing sword of orc death on eBay and "sell" it to someone else, you can be taxed on that. Why? Because you've converted something without value into real property, and that is income. However, one major problem with that you never really owned the thing that you sold to begin with. Blizzard does, and if you search eBay for +5 singing swords of orc death, that's one of the reasons why you won't find any; you're trying to sell someone else's property.
It's kind of like subletting someone else's apartment out, which you have no legal right to do. Aside from the fact that you'd be in a heap of legal trouble from the owners and probably your "tenant," yes, you would still be taxed on the money that you got paid, since it was real income. But if a buddy is simply letting you use his apartment (like, you know, Blizzard is letting you use that +5 singing sword of orc death), you most emphatically do not have to pay tax on it as income.
So no, nothing in the land of Azeroth will be taxed, and people who are worried about it are worrying needlessly.
Suppose you use the tool (like in Second Life) to create an alife - an artificial lifeform with AI. Suppose the you-plus-computer-generated character can interact with other human players.
Suppose it makes money for its own use.
Suppose it has kids, and they make money.
Who pays the taxes?
If the alife does, how you gonna arrest tax cheats? De-res them ala Tron? That won't work so long as there's backups.
Once alifes begin their own game-based economy, and start trading with humans, might humans start getting money that "comes from nowhere" when they convert it by sales to other geeks on Ebay?
I do not envy the folks who are hired to write and/or enforce these laws - programmers can write source code a lot faster than lawyers can write legal code.
Pavlov wouldn't be so famous if he'd used a can opener instead of a bell.
Any money paid to the company hosting the game is entertainment dollars spent, no matter what service or product it buys. If you spend $1000 US for $10 million Linden or 10 million acres of virtual real estate, in the US gov't eyes you're buying software or a software service. That's all. Linden dollars, virtual land, soooper weapons and hot elvish sexbots - why would the gov't even care what the software 'service' is in your imagination?
Eventually, it'll get to where it's as complex and may be considered a foreign economy. Transactions that take place using in another country using that country's currency are not taxable by the US. The US can (IIRC, does) tax you for no other reason than you're a US citizen, but that's probly reduced by taxes paid in the other country and exchange rates. I seriously doubt anyone wants to attempt to set that up with MMOs. I expect that the taxation would be on sales in US dollars between humans in exchange for a parallel but opposite in-game transaction involving in-game objects. The gov't won't care about the bits in the box, but the bucks changing hands on Ebay. I suspect the tax rate would be like any other online sale.
Pavlov wouldn't be so famous if he'd used a can opener instead of a bell.
You can't exactly force them to acknowledge something that isn't true. If the terms of the licensing agreement state that they retain ownership of all in-game property, then you don't own the in-game property. Yes, some people do try to sell it anyway. Yes, that income should be taxable. No, that doesn't mean that it's ok to sell in-game property that isn't yours, and it doesn't mean that you can force the game publisher to give away that property. TFA made the analogy of knocking off a liquor store, or embezzling from your employer. Apparently those things are already taxable. (Learn something new every day, huh.) That doesn't mean that it's ok to do either of those things, and it especially doesn't mean that the government should force the liquor store owner to acknowledge that the stolen liquor rightfully belongs to the thief, which is what you're suggesting.
Santa's suicide mission go!
Stock is completely tangible as it legally IS a portion of the real assets of a company. The stock in your posession is just a technical way of labeling your ownership of those real assets. Kind of like a DEED.
How long before states want sales tax? Perhaps because they realize it is impossible to implement, our state demands self-disclosure of internet purchases and payment of sales tax annually on the tax return.