Brimtown
Federal taxation of virtual purchases?
Looks like the government may soon want a piece of World of Warcraft, and other online virtual worlds.
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Sigs by Phineas1382
"Rum all out...rogues a plotting." - Blackbeard
Federal taxation of virtual purchases?
Looks like the government may soon want a piece of World of Warcraft, and other online virtual worlds.
Sigs by Phineas1382
"Rum all out...rogues a plotting." - Blackbeard
Federal taxation of virtual purchases?
Looks like the government may soon want a piece of World of Warcraft, and other online virtual worlds.
Sigs by Phineas1382
"Rum all out...rogues a plotting." - Blackbeard
The following words come to mind:
Federal beauracacy
Red tape
Political nightmare
Tax forms to fill out
The Feds can't be that serious, are they?<div class="ev_tpc_signature">
Pokemon Diamond Friend Code: 4682-4970-6275
Wii Friend Code: 4443-7625-9283-3123
It does seem rather preposterous, like the concept of requiring e-stamps for email. But I wouldn't put it past the federal government to at least study it. Maybe they figure that gamers are the least likely group to vote, and therefore the easiest targets?<div class="ev_tpc_signature">
Sigs by Phineas1382
"Rum all out...rogues a plotting." - Blackbeard
I was just about to post this. Dang it...
Ok... As someone who earns his living off the goverment I can honestly say, the goverment never met a study they did not like. That does not mean that they always do anything about the studies. They just like to have them.
That said... Be glad you only get half the goverment you pay for.
We thank you for your time and consideration on this subject. Please fill out form FTD-3384/657 par. # 03-98, 99-178 if you have any questions or comments.<div class="ev_tpc_signature">
Sig by Nutty
Two things about this that the average person probably does not know:
1. All winnings ARE taxable, and by that I mean the tax code TODAY. Yes, that ticket you bought at the drug store where you won $100 bucks is TAXABLE. Same goes for the 50/50 you won at the little league game. You get to net gambling losses off of the proceeds (cost of the 50/50 ticket) but the net is still taxable. Just because it is small does not matter. Sure the IRS will probably never catch it...but it is still true. Prizes in tournaments, even if non-monetary, are technically taxable equal to the fair market value of what was won.
2. Currently 1099 forms are required to be issued for any "non-employee" compensation if the value of the services, prizes, or cash exceeds $600 in value. This exonorates the company from having to do a 1099 for small transactions like this. It does NOT make the prize or payments NON TAXABLE though. The receipient is still supposed to pay federal income tax.
Of course this is all subject to change at any time by the tax code or future laws...but that is how it stands now.<div class="ev_tpc_signature">
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Ick
Check out www.ICK.BZ
Weapon Statistics For
Ghost Recon games including ADVANCED WARFIGHTER
But this is different. Let's say you play an MMORPG, your character defeats a boss, and you win a highly valuable sword. Even though you don't cash it in, Uncle Sam could still tax you, as if you had won a tangible prize in a contest.<div class="ev_tpc_signature">
Sigs by Phineas1382
"Rum all out...rogues a plotting." - Blackbeard
I think the question your are asking is no as far as my understanding goes.
Let me see if I am misunderstanding you.
Lets say you put in Rainbow 6:Vegas and get an achievement. Not taxable. Why? Well I suppose it is because it is a feature of the game you bought, not something "given" or "earned". Furthermore it has no market value.
You continue to play multiplayer games and rank up, you get the right to play with the Desert Eagle. Again, not taxable for the same reasons.
You play Runscape online and get the santa hat. It is part of the game fuction and is not taxable. it does have value however as another online player offers to send you $100 in the mail if you trade it to him for 1,000 gold pieces. Getting the hat in game, not taxable. Selling to another guy for $100 and 1,000 in game gold pieces...equals $100 taxable event truth be told.
You enter a contest and play the "Termination Ladies", winning $500. While Uber-Hard, the game company promoting the contest does not issue you a 1099 for the $500, it is still taxable.
You enter a contest and play the "Termination Ladies", winning a $6000 Philips Flat Screen TV. Uber-Hard, the game company promoting the contest, is required to issue you a 1099 for the fair market value of the TV. The IRS looks at your tax return to see if you properly reported the income and paid tax.
Does one of these fit your example?
Disclaimer: Contact your tax advisor or CPA. State laws may vary as well.<div class="ev_tpc_signature">
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Ick
Check out www.ICK.BZ
Weapon Statistics For
Ghost Recon games including ADVANCED WARFIGHTER
I dunno, if you read the article, it does seem to imply that virtual prizes or valuable assets could be taxable, even if they aren't cashed out.
<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">That's because game publishers may well in the not-too-distant future have to send the forms--which individuals receive when earning nonemployee income from companies or institutions--to virtual world players engaging in transactions for valuable items like Ultima Online castles, EverQuest weapons or Second Life currency, even when those players don't convert the assets into cash. </div></BLOCKQUOTE>
<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">The panel was formed in the context of recent questions--first raised by author Julian Dibbel in his book Play Money and in an article he wrote earlier in Legal Affairs magazine--about whether the transfer of virtual assets, or players' acquisition of virtual loot by, for example, killing monsters, creates taxable events. </div></BLOCKQUOTE>
Again, it's important to point out that this is just a study. Personally, I don't think it would happen. But just the thought that government would even consider it seems pretty insane.<div class="ev_tpc_signature">
Sigs by Phineas1382
"Rum all out...rogues a plotting." - Blackbeard
Now that I re-read that article here is my take on it.
Someone in the news media was given the task to spice up tax news as much as possible for maximum effect. They wrote a compelling and interesting article about a unique set of circumstances where certain online "rights" in a game carry certain "values" in the real marketplace...like my Runescape example.
Media puffery if you ask me.<div class="ev_tpc_signature">
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Ick
Check out www.ICK.BZ
Weapon Statistics For
Ghost Recon games including ADVANCED WARFIGHTER
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