Friday, January 06, 2006

IRS to tax your World of Warcraft booty?

I guess every game should come with an island tax haven. Virtual Bermuda, here I come!

Julian Dibbell has an interesting piece in the Jan/Feb issue of Legal Affairs where he explores the idea of whether the trading of virtual "goods" in virtual worlds could constitute an income-generating, and therefore, taxable exchange under the IRS rules of barter. This may sound ridiculous on the face of it, but because virtual world goods now have real-world market values, there is a legal argument here (albeit an unsettling one for anybody who plays online multiplayer games or hangs out in SecondLife).

The good news is that, when he pursued the question with IRS officials, they cocked their heads to the side like dogs hearing a high-pitched noise, i.e. don't expect to see 1099 forms shipping with multiplayer games anytime soon.


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