Originally published at: https://boingboing.net/2020/02/13/irs-says-including-fortnite-v.html
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I know a guy who, many moons ago, ran a web site selling Second Life in-world items for Linden, the Second Life in-world currency. Eventually, he also offered relevant real-world items, including graphics cards (a common upgrade for Second Lifers), still in Linden. Linden were pretty easily interchangeable for dollars; there was a market. Should the IRS have considered Linden a virtual currency? If there’s a market for V-Bucks, why shouldn’t it be considered a virtual currency?
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This month we are racking up the reasons Boomers and your mom need to quit trying to regulate technology. From new mobile apps to update poll results to V-bucks being real currency we have all the information we need to make sure decision making isn’t done at the local senior center.
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Just did the household 2019 taxes, out about $700 bucks to tRump Co., hope the choke on it.
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This more a case of agents not knowing the difference between Ethereum and V-bucks. But Crypto Kitty breeding, completely taxable. Find two people at the IRS who know what the hell a Crypto Kitty is.
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Maybe airline miles should be taxed too? They can be exchanged for flights, and can be exchanged for goods from the airline catalog. However they do vanish if not redeemed, and lose value over time. So tax the miles when they are used?
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Simple answer. The examples in question are not virtual currencies because they can simply be generated from nothing. Anyone with the right admin permissions can just “spawn” them.
For actual virtual currencies, they are computed using cpu cycles, time, and energy. They are also traceable, but I think the key is in how they are generated and that they can’t be simply “clicked” into existence.
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I think you need to do some research on the financial instrument known as a ratchet.
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I sell in-world items in Second Life for Linden Dollars. L$ aren’t a real currency. One pays taxes on the USD proceeds from selling L$ to other users, of course, but L$ themselves have no real-world value.
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This is an issue they’ve looked at. In general, the IRS says that if you get miles from the airline or a credit card, they consider them basically a rebate and hence non-taxable. If you get them from another source, or if you travel for work but get the miles personally, they say they may be taxable, but they haven’t decided definitively the last time I looked into it.
Now, if you convert miles into cash, they’re definitely taxable right now, and that should certainly apply to in-game currencies as well. Barter is taxable, so there’s a firm basis for saying that converting game currencies to things you would normally pay cash for (subscription fees or in-game purchases) should be taxable, but I don’t think they’re concerned enough to go after it right now.
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The CNN version of the article seems at odds with the boingboing headline. They seem to conclude that in-game currency transactions do have to be reported despite the fact that the IRS took those guidelines off of their site.
http://lite.cnn.com/en/article/h_378f34f0af84f804a9386c82df9a4fb6
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The Secret Service once raided Steve Jackson Games over a cyberpunk GURPS supplement. Things never change.
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There’s no secondary market for v-bucks. You can’t sell them. You buy them from epic, and you purchase virtual items from epic with them. You can’t exchange them with other players.
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Honey!? How much gold did you earn this past year in World of Warcraft and what’s the current US exchange rate? I’m doing taxes and the IRS needs to know how much fake money we made.
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The first half of this sentence seems to contradict the second half.
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I wonder if there’s a ToS clause that makes the difference. The game I play that has a faux-currency of this kind can, in a roundabout way, be traded between players. These non-tradeable “gems” purchased from the game company can be exchanged through the game’s system for tradeable “gold” (at a variable rate determined by some internal algorithm weighing relative demand), sent to another player, and then converted back through the same exchange (via the other end of the algorithm). Since gems are sold at a fixed rate relative to USD, this means you can calculate the USD value of gold using the current algorithm exchange rate whenever you feel like having an existential crisis over how little your time in the game is “worth.” You can also, if you’re savvy and enjoy spreadsheets, watch for the exchange rate to be favorable and increase your virtual wealth by investing gold into gems and vice-versa.
However, it is explicitly against the game ToS to receive gold or other in-game items in direct exchange for real money, punishable by having the tainted gold/items deleted and an account ban for anyone who touched them. (Though of course there’s still a secondary market because there always is in that kind of game economy.) But maybe the IRS lets you off the hook if you explicitly declare that your fake money is forbidden from being exchanged back into real money.
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If you take your in-game money and convert it to real dollars somehow (see also gold farmers), the money you earn from that is likely taxable. If the money stays in game as electrons, not taxable. I wonder how the IRS would come up with an exchange rate for STO credits or Naval Action reals.
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They manage to tax plenty of things which are more difficult to put a dollar value on than in-game currencies.
If I received all my income in STO credits, and found someone who was willing to sell me room and board in exchange for STO credits, are you saying I could live without paying any taxes? I doubt the IRS would see it that way. As soon as you are effectively using an in-game currency as a real currency, I assume the IRS becomes interested in treating it as one - even if it’s never exchanged directly for US dollars.
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Shouldn’t children learn early on what it’s like to be an adult?
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