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Quick note from the road for U.S. readers who make real money in virtual worlds. It’s tax season, and CNNMoney reminds us that “earnings in real U.S. dollars generated within virtual realities are reportable to the IRS.”

What’s interesting is that “[t]ax law is murky when it comes to dealings that occur solely within Second Life or other computer-simulated environments.”

The article makes some reasonable predictions for the future, and provides a fairly solid analysis of the current situation. Link below.

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One Response to “Virtual Entrepreneurs and Real Taxes”

  1. on 22 Mar 2007 at 5:34 amJohan Chandrayaan

    Don’t forget, expenses that are incured in the start up of a virtual business are tax deductable! I haven’t heard this point stressed nearly as much!

    I wonder… are gambling losses tax deductable as well? Can you start some kind of virtual business that has no hope of succeeding simply to be able to write off your game fees, land tier, etc?

    I did read somewhere that profit that remains in the game isn’t considered income until you cash it in.

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