Lawmakers Trying to Head Off Massive Taxation 108
An anonymous reader writes to mention a Reuters article about a lawmaker's attempt to stop the Government's interest in taxing Massively Multiplayer Game content. R-New Jersey Jim Saxton is cautioning against exploring the taxable status of in-game items. From the article: "'The goal of the forthcoming Joint Economic Committee study is to help lawmakers understand the issues involved and head off any premature attempt to impose a tax on virtual economies,' he said. Under current law, Saxton said if a transaction takes place solely within a virtual world there is no 'taxable event.' Dan Miller, chief economist for the Joint Economic Committee, said earlier this week that the committee's study would start with a blank slate and be completed by the end of the year."
so, does this mean I can deduct (Score:4, Interesting)
Actually, yes, you can deduct them (Score:2, Interesting)
Making money by monetizing game assets is no different than making a profit by buying and reselling items on EBay. You generally get to deduct costs that are 100% related to your hobby/business such as subscription fees, and make partial deductions for costs that are partially used for your enterprise, such as your computer, subject to limits set by Congress.
If the IRS determines you "labored" to create your virtual world before selling it for US Dollars, they may also hit you with self-employment, Social Security, and medicare taxes. On the bright side, you can open up a self-employed IRA and enjoy other benefits of being self-employed. In the eyes of the IRS, that big island full of stuff is no different than the quilt your mother made from raw materials then sold for a profit on E-Bay.
Here's where things can get tricky with respect to the IRS:
If you barter assets in-game, they probably won't be taxable. But if you barter for a real-world asset, or an asset in another game, they may be. The IRS taxes barters, particularly barter-for-labor or barter-for-fruits-of-labor, as taxable events, just as if the items had been bought or sold for money. Appraising the value of an island full of stuff in one game that you trade for a similar island in another game can be tricky, much like trading two old, collectable manuscripts or paintings.
Ridiculous (Score:4, Interesting)
It's like taxing for sex (Score:3, Interesting)
Re:Let's "have a chat" with these guys next electi (Score:2, Interesting)
Re:No value? (Score:3, Interesting)