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May 03, 2007



ROFL ! That " revolutionary " ideea was stole from Sweden :-)


I'm curious about what exchange rate will be used for paying for pizza - how will this affect the stability of pricing from either the user's or the vendor's POV. And, if the liquidity issues surrounding Lindens are real, how confident can any pizza vendor be that they can exchange their newly acquired Lindens for the dollars they need to make their businesses go? Won't an exodus of Lindens from the SL economy put a downward pressure on the exchange rate, making either Linden-based pizza prices rise or profits/stability fall?

We might also look to see how online systems like Tencent's QQ coin is blurring the lines been real and virtual currencies as other businesses not related to Tencent have begun accepting payment in QQ coins (though the People's Bank of China has ordered this to stop).

The fourth wall appears to have some cracks in it...


From the article that Mike linked to:

"This week, a Chinese court sentenced a former executive at Chinese online gaming company Shanda Interactive Entertainment Ltd. to five years in prison for virtual embezzlement. Along with two accomplices, the programmer who was in charge of creating assets for the game Legend of Mir II created his own virtual assets without permission and then sold them for $260,000. He says he plans to appeal since there aren't any laws in China covering virtual assets."

Fascinating stuff...


Nah....not fascinating at all....just " conspiracy theories ", " paranoia ", and also : " c'mon, they cannot do that because they would be in violation of myriad laws ". Ofcourse LL and MindArk and not only , designed and used from the very beginning their " non-games " for personal unethical/imoral/illegal earnings , " printing " and selling their virtual currencies for real money in a pair-to -pair private trade .How many " alts " does LL use in SL ,how many $L those alts " make " / day and who are the real persons taking the very real dollars ?

LOL ! I'm not serious, ofcourse ! That would be just....fascinating.



The magic circle has already been broken. Any attachment we have had to it has been a fiction. It can be rebuilt within the community of practice, although some would argue that it wouldn't be a magic circle at all.


Attempts of pizza purveyors to exchange their Lindens for "real world" currencies would put downward pressure on Linden values if there is no reciprocal demand of Lindens in those currencies. However such businesses may find it in their interest for tax or inflationary reasons to leave their revenue or earnings in Lindens.


@Landon: Lol, you're preaching to the choir on that one. Nonetheless (or perhaps therefore), when it comes to questions of policy, such social constructions -- fictional as they may be -- are a better guide than many other things. Better guides, that is, until they're not. :-)



SL Boutique was offering things like graphics cards (real products) for sale with an option to pay in L$ I think. Players in EVE already pay for time cards (ie real service costs) with in-game ISK, though maybe not to CCP- but how is "Johnny LaserGuns" who will take ISK for his timecard different to the "CCP partner sites" who take visa, mastercard or paypal for them?


Hi all,

The question, of course, is not whether the exchange of Lindens for pizza is a taxable event. It is. It is no different than cashing out. Gross income comes about whenever your wealth is increased by the receipt of money, or property, or services.

The question is whether the receipt of Lindens in and of themselves constitute a taxable transaction. So if I get Lindens credited to my player account because one of my avatars models or sits in a chair or something to boost a store's visibility, are those Lindens gross income?

My intuition currently says "no, they're not," but the more Lindens can be used to purchase RL goods and services, the weaker that intuition becomes.

Incidently, once receipt of Lindens becomes gross income, then I think receipt of other "virtual items" get the same treatment because they have a fmv in Lindens. That is, it's all in or all out and the result does not turn on the invididual "resident's" activity any more than it does not RL. So folks who have gross income from their hobbies must report and pay taxes on that income. They are also allowed deductions for their expenses that are related to the production of that hobby income, up to the amount of the hobby income.

Cheers, -bryan (who is now in the middle of grading his baby tax exams)


I'm coming at this issue as a game veteran and tax n00b, admittedly, but I have to say that the "cash out" idea makes a lot of sense.

In a casino, I don't pay taxes on what I win in a hand of poker or roll of the craps dice because my gross income hasn't "really" changed till I cash out the chips. I am guessing that tax code will go a similar direction for VW issues. If you sell the account/sword/ship for real world $, you'll be subject to taxes on your income. (But would the seller pay taxes or the buyer, as in a car purchase? I'd think the seller pays income tax.)

And yeah, of course if you can use the VW currency for real world purchases of goods/services, you'll be getting taxed on that soon. Good luck, pizza folks.

But can you tip the delivery guy in L$? ;)


@Tripp, The casino analogy is what initially got me into this mess. Be careful about drawing the analogy too tightly, however. The IRS has issued a Rev.Rul. (of which I give just the barest mention in the paper because it was too long already) where it ruled that virtual dollars credited to an online casual gamer's account were to be treated as real dollars because the gamer "could" cash out at any time, so the old constructive receipt doctrine came into play. Think about playing poker for chips and then think about playing video poker where your "winnings" accumulate in the machine and you can choose to "cash out" at any time. This is all very easily tracked and reportable by the casino and the IRS Private Letter Ruling (PLR) seems to require the casino to report any accumulation of over $600 in your interstitial winnings in the machine.

Regards, -bryan


@Bryan: Well, does the ruling you mention say that you must pay taxes on your winnings in a hand-by-hand way? I don't think that they would tax you on every hand you win, would they? That's why I think the "cash out" idea makes sense. Of course, anything is possible; it's not impossible to imagine getting a 10% tax on every hand/roll/etc. where I win anything. It just seems unlikely.

I guess when you move from currencies to the items that are sellable (e.g., the rare sword that you could sell to another player for $XXX) it becomes trickier. I know people (e.g., Dibbell) have written about this. I wonder what the current status is.

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