How Long Till Virtual Currency Taxation? 166
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? "
Why it won't happen... (Score:3, Interesting)
I think there are a great many things limiting the taxation of this "income." So, don't worry. This will not happen anytime soon.
It'd be easier (Score:4, Interesting)
If virtual currency ever gains real value (that is... you'd accept your paycheck in WoW gold instead of cash) then you might see taxation systems required to be in the game. But I doubt that will ever happen (Okay that's 50 gold pieces for the broadsword and I see you live in California so that'll be an 8% sales tax rounded up or 54 gold pieces.)
Re:is it simpler than it seems? (Score:3, Interesting)
If the market for those items were considered robust enough (not sure how you'd measure that), I'd say you're very likely going to be taxed at the time of acquisition, not the time of sale. Just like winning items on a game show, it doesn't take the sale of those items to generate a taxable event, merely the acquisition of those items represents income received. Just ask the people who got cars from Oprah [opinionjournal.com]...