January 9, 2006

Declaring Plats as Income on your 1040? Come again?

From TerraNova

“IRS advisers specializing in the arcane field of barter income recently offered the opinion that any trade of one virtual item for another–gold pieces for thick leather, uber drops for plat–could very well constitute a taxable, income-generating exchange according to the IRS’s rules on barter. ” — Julian Dibbell

It was one thing when people asserted that you should claim ebay-sales of rare virtual items as taxable on their 1040s, but this new claim goes beyond the pale.

I’ve been trying to stop this meme for awhile, including creating the KidTrade design to demonstrate that a ebay-virtual-goods-market is a design choice, gutting the argument that virtual goods are somehow transformed into “real property” just because these markets involve real money.

This meme must die.

Bruce Boston is attempting to get the IRS to give an official opinion on the topic. I’ve joined Bruce’s effort to end this silliness. There’s no way the IRS is going to tax gold-pieces spent in world, and this project should put that question to rest, for good. If your company would benefit from this clarification, please consider participating, or at least adding your voice.

[Comments disabled here, please direct comments either to the Terranova thread (for discussion of original question) or Bruce’s Blog (to participate in the IRS clarification project).]

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