It's the beginning of a new year, which means it's time to think about taxes. I know, I know, death and taxes and all that, but I've learned from past experience that thinking about taxes earlier in the new year means less misery as April 15th (the tax filing deadline date here in these United States) looms closer.
I've already begun pulling together receipts and such, and the 1099s have already started showing up via the snail mail. Once upon a time, I thought about trying to figure out a way to "stick it to the man" -- kind of like that exec in the funny new Sprint TV spots -- but there's no sticking it to anyone when you're a single male with no dependents -- it is you who typically gets the sticking.
So, it was with great amusement that I ran across the story on C:NET posing the question as to whether or not virtual assets are taxable.
Now, when I say "virtual assets," I mean just that. In the world of online fantasy gaming -- particularly for what have come to be known as "massively multiplayer online games" (MMOs for short) -- multiplayer games like "Ultima Online" have fomented the creation of entire underground economies in which buyers and sellers trade imaginary goods. In fact, this market is estimated to be worth over $135M on the game Everquest this year alone.
Surely ye jest, Turbo, ye exclaims!
Ney, gaming warmonger. And while it may not have yet gotten the taxman's attention...yet...it is only a matter of time before the tax trolls awakeneth to these potential virtual tolls!!
So, Can I Depreciate That Arctic Ogre Lord?
So what are these potential tax evaders selling? In games like EverQuest, which has an estimated 450,000 subscribers, players are exchanging virtual goods, capabilities, and even skill levels worth real money (i.e., you can buy from someone else the acquired skill level that they spent several hours' attaining so that you can quickly jump into a higher level of the game).
Julian Dibbell, author of a recent article on the subject of virtual taxation in "Legal Affairs" magazine, indicated that he made some $11,000 in 2003 in selling virtual assets via eBay, but explained that his local IRS office was puzzled by the concept when he tried to explain it to them, and that they didn't quite know how to advise him.
My take? With the total GDP for the MMO marketplace being an estimated $800M this year alone, it's only a matter of time before someone at the IRS figures out how to initiate an audit on the ogres.