[MUD-Dev] Are gold pieces taxable?
Thu Jun 26 22:01:27 New Zealand Standard Time 2003
From: Koster, Raph [mailto:rkoster at soe.sony.com]
> From Julian Dibbell's blog:
> OK, so I realize I'm getting ahead of myself here, but what exactly
> do I tell the IRS next April?
Awesome article Raph.. is this what you're going to be doing, now
that your game is 'finished'? :) Don't bother to answer, I know it's
So many approaches to take!
Pre-note: I do not have the tax code at my fingertips, nor do I want
to look everything up, so treat all my tax trivia as hearsay.
1. If they recognize gold-pieces acquired in Norrath as 'income'
then they'd also have to classify the cost of acquiring that
income as a 'business expense.' If that were the case, then not
only would your subscription fee be a cost of income, but so would
your modem charges and your electricity, if you spend at least 50%
of your time doing 'business' with those assets, correct? Not
only that, but you could then qualify your den as a 'home office.'
Or, better yet, you could count the expense of that spiffy new
sword as a business expense, since virtual equipment makes as much
sense as virtual cash. Oh, the headaches as you try and figure
out depreciation due to nerfs! And what about your character?
You can sell them.. so gaining levels should count as income, but
what if they die and lose experience? You could try to buy up
characters at below market value just so you can forcibly
depreciate them to offset gains! Hmmm... does that mean the IRS
can tax my college education, because it made *ME* more
2. If they really base their estimates on the "GDP" of Norrath,
how would they go about taxing income in a foreign land? Can the
US tax income generated by a company on a company's private
island? What if they moved the server off shore?
3. The most likely scenario I see is that monetary value in a
virtual economy is treated just like the stock market (the
parallels abound) and that you're only taxed at the time of sale
at the capital gains tax rate.
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