Economics Talk

mjt95 · Guest

Article: Virtual businesses: taxman gets unreal
Source: AccountancyAge
http://www.accountancyage.com/accountancyage/comment/2198629/virtual-businesses-\taxman-gets

This is a very scary development: the American Internal Revenue
Service (IRS) is looking at taxing virtual profits.

You can be sure that the UK's HMRC is thinking the same greedy way.

An accountant wrote into Accountancy Age with the following queries:
* Wouldn't a virtual gain only become taxable when it becomes a
realised gain (i.e. when converted into a real currency)?

* What if the virtual currency cannot be traded legally? For example,
in the World of Warcraft, the website's terms & conditions clearly
states that the currency is illegal and that Blizzard still owns it.

* In what currency is the tax payable? If you make a profit in Second
Life, do you need to pay 'Lindens' to HMRC/IRS? Would they accept it?
Would they know what to do with it? Where is the product made? Who
buys it? Where are they (in which jurisdiction)? What about foreign
exchange gains/losses? What about allowable expenses incurred in the
course of making such 'profit'?

The accountant wrote in its letter, "Your article highlights the
possibility of something a lot of people would consider ridiculous.
There are people who are drawing $2,000+ a month from such games, is
this fully taxable? It already is!"
--

mjt

A supporter of http://www.taxpayersalliance.com/, fighting to stop the
government ripping off the taxpayer.

Tax cuts v public services? No! Tax cuts *for* better public services.