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Mar 21, 2007



Since I paid for these items, and the tax is collected on the transaction, I should also be able to take the loss deduction that goes along with it, when I find out that the item I bought today is worth much less in the next upgrade cycle, and sell it then. So insted of investing in stock, I invest in game trinkets, so all of the accounting that goes into any real markeplace would be applicable to me as well, i.e. i bought 2 uber-widgets for 9 and 11 gold, and sold the one that I paid for 9 gold for 10 gold so my tax would be on the 1 gold profit that I made (or did I sell the 11 gold one and made a loss of 1 gold?).


Fortunately for millions of WoW users, everything in the game is owned by Blizzard, and not by them. Says so in the EULA. We can't be taxed on stuff that ain't ours. End of story.


There is a question if is it legaly ok to ask for tax money for in-world transactions. But, there is also a question what virtual worlds will look like if tax is paid inside the world.
For example, if I, as a resident, am paying taxes based on my transactions in L$ then it is quite normal to expect that state that gets that mney will do its part of the deal. For real life taxes I pay I got legal, police and medical protection, education, and many other things. Shall we expect a goverment which gets the taxes to provide better stability of grid, to protect us from griefers (that would include virtual police and judical system)?
And which country is in charge for those taxes? If an European and player from Japan do transaction in a game owned by American corporation, who is in charge?


There are a lot of excruciating details around this issue. While it is true that not all taxable events are generated by realization, it is seldom that unrealized book values are marked-to-market and taxed before realization.

In the case of virtual world transactions, they could probably only create a tax event if their book values at the time possession is taken are known in dollar terms. It's technically possible to imagine a phat-lewt taxation regime; but I wouldn't lose sleep over that threat.

The bigger threat, IMO, comes from what ends up happening to the platforms that have convertible currencies. They're kind of screwed either way. If they have an independent currency, then it's unlikely transactions denominated in that currency could be taxed practically before realization (translation into dollars). But floating v-currencies may not survive long for a host of other reasons. If the v-currency is fixed, and thus denominated in dollars, then intragame transactions could easily be assessed for taxation.

Taxation of this sort would also erect an argument for virtual property rights and financial claims. Its' very difficult to imagine a system in which the "player" is liable for taxes generated from her financial gameplay activity but she is denied legal and financial claims on the property for which she pays taxes.


Government is always looking for new ways to get taxes from its citizens. I'll guarantee you at this very moment some public servants are kicking around this issue.

But if they do that, does that mean I can claim a deduction for the time, expenses, deprecition (wear and tear on swords), use of camping supplies, virtual health insurance while me and my band of merry adventures (a statutory partnership) head off to hunt for the foozle. For the taxes my government collects, I expect services in the virtual world too.

Do you ever stop and think that maybe this is getting too ridiculous?


If they are going to tax me on my "profits" in Second Life, then they are going to take the deductions on the costs of doing business, just like in any other business. So in their quest to gain a sliver of my 50$/yr in sales -- if that -- they'll lose the 72$/yr premium account charges, the electricity to run my computer, the costs of the land to build my business (hey! Free islands!) and all the scripting, building, and furnishing I pay for.

Go ahead IRS... make the game free for me to play.


and one more thing....
if I pay the taxes, I should become the legal citizen.
for that, UN should recognize SL as a state, and SL needs it passport. I am fine with being a citizen of SL. and you?



"Do you ever stop and think that maybe this is getting too ridiculous?"

Every day.

Taxing possessions in a virtual world? Might as well tax animated gifs on webpages.

Look, if you are one of the 116 people (less than .00232% of SL residents, I might add) who had a positive monthly cash flow in February 2007, then you should pay taxes the same way the neighborhood kid who cuts your lawn for $10 does. And unless you're a member of a select group of 5000 residents, that kid made more than you did anyway.


when you work on ebay the prices on shipping are wrong you even make money on others why not pay taxes we all doooooooooooooooooooo

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