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A wrinkle I've not seen discussed
Let's talk about unrealized vs. realized gain/loss (what follows is my unprofessional opinion only).

Imagine that real world people are willing to pay $1000 for a particular game item. The contention is, if you aquire one of these items in the game you should be taxed on your unrealized gains of $1000.

Well first of all unrealized gains are not taxed as far as I know, otherwise every time your stock portfolio went up in value you would owe money to the IRS. It's only when you actually sell the stock that the tax comes into play on the gain or loss. If you never sell, you really have nothing and owe no tax. If, contrary to the EULA you do sell for real money, I believe you are obligated to report it on your taxes. I have no idea whether it would be capital gains or ordinary income, but it is certainly reportable income.

Here's another angle.
The game administrators can create an arbitrary number of these items and place them wherever they want at no cost. They could put them in YOUR account. Surprise! Would you now owe $10,000 taxes on an item you didn't know you had in inventory because you stopped playing the game a week before they did it? I don't think so.

Any time you make money from any source you should consider that tax implications and report the income as required. The fact that you made money from a game is irrelevant.
Posted by: orleff   Posted on: 01/18/06 You are currently: a Guest | Members login | Terms of Use
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Taxing virtual winnings  steeleweed | 01/17/06
No way  too_much green_tea | 01/17/06
If you use the net to make money  voska | 01/17/06
Virtual Taxes  Joey1058 | 01/17/06
...for Virtual Government  JJ Brannon | 01/17/06
Joy!  unoriginal_sin | 01/17/06
Thought tax  law_n_disorder | 01/17/06
Fair share?  Henry Miller | 01/17/06
Remember that  Real World | 01/17/06
I /don't/ remember...  Henrik Moller | 01/17/06
It's OUR government, not YOUR government  Real World | 01/18/06
Well if there is irs....  Eskiegirl302@... | 01/17/06
Has the world really gotten this stupid?  Protector | 01/17/06
Value is the issue  gbrownzoot | 01/17/06
What about theft in RPGs?  shadar | 01/17/06
How much is one electron worth?  Mr. Roboto | 01/17/06
until there is any money exchange hands...  JJ_z | 01/17/06
Taxation  doc.two@... | 01/17/06
Thats a tangible item.. virtual items are not.  Been_Done_Before | 01/17/06
Don't forget cars  Patrick Jones | 01/17/06
But off the Virtual assets subject...  alle2003@... | 01/17/06
What I am wondering.............  Shelendrea | 01/17/06
That all depends on the situation  voska | 01/17/06
A wrinkle I've not seen discussed  orleff | 01/18/06

What do you think?

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