As a break from the usual political fighting around here, I present something we can all hate together:

http://www.npr.org/templates/story/story.php?storyId=5199966

You can listen to the story for free or buy the transcipt. The long and short of it is that according to the IRS Barter Desk, in game trades of virtual property are likely considered "in kind" income and taxable. The logical extension of this is that even looting virtual property may be taxable as income since the virtual property has a market value.

Note: the IRS has not made an official ruling on this since, as the author states, no one has requested that ruling.

I just want to know when we can start buying DKP futures.

Fil

Not enough money in it ... yet. But as more and more games go the MMO route and you start talking billions in potential virtual economic transactions, I can definitely see this becoming an issue with the IRS. One can only pray it might get us to question the sanity of the income tax system, as long as we're talking about fantasy.

This first came to the attention of the more business-minded people years ago when it was informally (ie, not yet in court) decided that yes, if you could prove an actual loss of valued property, there were very real liability considerations for whomever caused you to do so -- getting a Blade of Carnage ninjaed back in Velious represented a very real loss of easily $500 in "goods" since it was tradeable.

Would be curious if Furtivus had any opinion on the subject, since he's the only poster he with practical legal experience of which I'm aware.

The logical extension of this is that even looting virtual property may be taxable as income since the virtual property has a market value.A black market value you mean.
Does a drug dealer gets taxed on his income?

Does a drug dealer gets taxed on his income?

They could get him for tax evasion if they can prove the income and it isn't reported.

Remember, that's what they busted Capone for :)

Its exactly why the Federal tax Stamp was put into action. I had a roomate back in the day that was busted with a sizable amount of the green stuff (like 13 pounds) and he was charged with not having a tax stamp on his goods...pretty funny and just another way for them to get you with another felony.

My example was a bad one, but it's hard to find one as there is no real precedent.

I guess they could bust people trading in game gold/items fo real cash.

But in game trades, items have only an "illegal" value, the theoric profit is only made if you consider traders to be potentially guilty of exchanging their new possession for real money. Can you tax people because they "may" be outlaws?

There is nothing illegal about trading online items or money. It against the terms of service of nearly every MMO, however you could easily make a prima facie case that because they don't actually do anything real to stop it despite the capability, they are in fact condoning it.

And, in the case of the games or servers that DO allow it, they have even less traction against it. You could almost see an anti-competitive case on those grounds, since it is not illegal to beat a company at their own game, and in fact many companies do this all the time -- witness people that resell cellular service at different price plans, for example.

I always wondered what Buyza sounded like...

Anyway, if the IRS decided to persue these people and they were in fact caught and nailed, that would give a solid entity for the game manufacturers to sue for EULA violation. Assuming that what Malse said couldn't be proven (the prima cacie thingie).