[geeks] Second Life is not a game?

[Jon Gilbert]

On Jul 31, 2007, at 3:42 PM, William Kirkland wrote:
> *IF* we assume that "Second Life" is not a game ...
>
> When you file your taxes, do you claim your income that your avatar
> received in 'Second Life'?

That is actually a very good question. I have spoken to my lawyers  
about it. Essentially, if you earn Linden Dollars, but you do not  
"withdraw" them from Second Life, then while they are in there they  
can be considered as investments, because the L$ fluctuates. There is  
actually a market for exchanging currency where you can buy L$ with  
the specific intent of making money trading it when the value of it  
rises (http://www.secondlife.com/currency/market.php). It operates  
just like a stock market.

My understanding is that you only have to report L$ as income on your  
taxes if you ever convert the L$ back into real-life money. Of  
course, I'm not a lawyer, so maybe I have this all wrong. Obviously  
the laws don't specifically state what you have to do in terms of  
taxes, but certainly once you convert L$ into USD$, then you have to  
report it as income.

-
Jon Gilbert
PGP fingerprint: 7FA9 B168 73CA A698 DD9E  2DF2 EE1A 3E73 3119 741F