How Long Till Virtual Currency Taxation?

GameDaily has a piece on the thorny issue of taxing virtual currency. From the article: "The current tax law has a clause, #525 to be exact, entitled 'Taxable and Nontaxable Income.' This verbose, meandering clause describes all manner of abstract (legal, illegal and otherwise) means by which you can earn income. Some of these obscurities can only be taxed by the speculative and vague term, 'fair market value.' ... This clause also includes a statement about goods acquired through barter or won (prizes or cash) in a game. Technically speaking this means those 'earnings' are taxable the very moment someone comes into possession of them, regardless as to whether or not they are sold for money. While no one knows the exact worth of all the virtual assets floating around the MMO gaming-verse, estimates for the sale of these goods range as high as $880 million a year. Step back and think about that for a minute... EIGHT HUNDRED AND EIGHTY MILLION! That's a crapload of real world money! Money made during what can be considered the infancy of the genre. Can you imagine how exponentially greater this amount will be in a few short years? "

I can see it all now...

[Rob T Firefly]

You slay some MMO monster, and it drops a small pile of gold, jewels, and several IRS forms for you to fill in.

So many questions...

[Volante3192]

Will the IRS allow a one time, tax free gift to your in-game spouse for up to 100k plat?

If you destroy a no-drop item can you get a refund?

How bout deductions for funding your own crafting business?

Are repairs business expenses?

So many questions... and why do I think all the CPAs are going to be Druids?

(Sorry, no WoW experience, all EQ1 based references...cept the repairs)

Re:I can see it all now...

[olego]

You have slain the goblin!

> l in corpse
You find 10 gold coins. IRS collects 2 of them.

Re:I can see it all now...

[Walt Dismal]

And this why you need Turbo Virtual Tax 2006 NOW! Only $29.95. State virtual taxes not covered in this edition. Also does not cover taxation by king's men, magical losses, or deductions for limbs or other body parts lost to grues under Section 2.427 of the Virtual Tax Code.

Re:Someday But Not Yet

[assassinator42]

I sure hope you're being sarcastic. Otherwise, if you're really not paying taxes, and living in the USA, expect a knock on your door from a not-so-friendly IRS agent soon.

Re:I can see it all now...

[irablum]

I suspect it will go more like this:

You find 100 gold coins. IRS collects 5 of them.
oh, 5, that's not so bad.
IRS collects 5 more of them.
wait, he did that already, no. He did it again! hey!
IRS collects 5 more of them.
STOP THAT!
IRS collects 5 more of them.
You hit IRS for 1275 points of damage.
IRS collects 5 more gold coins.
I'LL DO YOU FOR THAT!
You critically hit IRS for 3498 points of damage.
IRS laughs and runs away.

then, later....
You find 1000 gold coins. IRS collects 50 of them.
You stun IRS, immobilizing it.
You hit IRS.
You hit IRS.
You hit IRS.
You hit IRS.
You hit IRS.
You hit IRS.
You hit IRS.
You hit IRS.
You hit IRS.
You hit IRS.
You hit IRS.
IRS has died.
Hmmmm... I wonder what I'll find on his corpse?
You find 1000 gold pieces. IRS collects 50 of them.
NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO OOOOOOOO!!!!!!!!!!!!!

Ira