To begin this new conversation, what about Taxes in Diablo? At the end of the year, I pay a massive amount of money to taxes for my earnings at The Traffic Blogger and especially Just My Two Copper. You can bet your house that the government will want a percentage of your Diablo 3 earnings. Even if you're making a grand over the course of the entire year, the government is going to want $300 out of those $1000 by the time all is said and done between government, state, etc. Is this fair? Should the government be able to tax this? Technically yes, but the discussion gets better with this next statement...
Should you be able to write off money you spend bettering your character or buying supplies for the purpose of earning real money on the Diablo 3 auction house; or perhaps exploiting it to your hearts content? I can guarantee you that it will be difficult to declare these and I foresee lawsuits springing up depending on how much money some people can make in the game. You may never reach high amounts, but I bet that people like this pro multiboxer could make insane amounts of money.
So should these players who make, dare I say, thousands of dollars a year playing Diablo 3 not be allowed to declare the expenses of their online businesses? Can't I declare all those bones I purchased for crafting purposes or all those weapons I bought to salvage as expenses?
I'll be tracking everything I spend on the Diablo 3 Real Money Auction House that relates to earning gold in the game. Better gear, weapons, supplies for artisans, leveling artisans, etc.
How about a percentage of your internet costs? Monitors? Computer repair? A new shiny mouse? Quite a bit could be written off for tax purposes. Even gas used to acquire these things could be written off. What about your purchase of the game?
It's a fun discussion, have at it and share you opinion. Right now all we have are questions and interesting analysis, but how is that any different from what everyone else is posting about?
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I'll be tracking everything I spend on the Diablo 3 Real Money Auction House that relates to earning gold in the game. Better gear, weapons, supplies for artisans, leveling artisans, etc.
Sounds fun...|||I'm very interested in this - there were some speculative posts regarding taxes and EVE Online over at Terra Nova, but I haven't read anything about DIII there.
IANATL (I am not a tax lawyer) (and this is not legal advice) but I think if the IRS does pursue DIII RMAH sales, it may be something we see a Revenue Ruling on. Small business write-offs are part of the IRC because of Congressional policy to promote small business. I don't know if the legal definition of small business would cover RMAH transactions. I can see that it would cover blogging income, because you're generating goods. On the other hand, a used car dealership is a legit small business, and DIII sales are basically the virtual version of the same.
The more I think about it, the more it seems like you're probably right about the small business-ness of DIII item sales, in theory. I do not know if the IRS will care - especially if relatively few people cash out, as Rob Pardo hopes. But I can't wait to find out.|||Very detailed, good things continue to share, let me experience growth.
|||In my opinion...Do you owe taxes on profit? Yes
Will it be worth the IRS' effort to figure it all out? Very Unlikely.
- The amounts of money involved for nearly everyone will be below the $600 threshold that typically generates a 1099.
- There aren't any Social Security numbers for them to latch onto to trace the income back to a specific person. Sure, they could trace it with some effort, but it won't be worth their time.
If they actually take an interest, it would be relatively easy to obscure the path with multiple accounts, proxies to mask IPs, and so forth. Feel free to worry about it if you want. I think it is much ado about nothing.
I don't think it is the OP's intent to use this as an anti-RMAH argument, but the same issue has been used for that purpose on other forums.|||Quote:
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I don't think it is the OP's intent to use this as an anti-RMAH argument, but the same issue has been used for that purpose on other forums.
I don't think it was the OP's intent to argue against RMAH; it seemed to me like he was just sparking discussion. As for your other points I agree that it would not be worth it for the IRS to track down each individual involved in real money trading, but they wouldn't have to. Just like the IRS doesn't track individual sales purchases but instead invokes a sales tax, the IRS would have precedent to treat the RMAH like a real storefront, with the sellers being vendors and the buyers being customers. In this case the burden of the taxes would fall to Blizzard, and they would have to set a "sales tax fee" that every seller would be required to pay from his earnings upon completion of the transaction.
The IRS is very keen on getting proper tax revenue from online business right now, and I could see the same thing happening in this case.|||I will be trying to make some money on the RMAH, but Ill be DAMNED if the IRS tries to take any of it. That money is going straight towards college.|||I'd just hate to see Diablo 3 get delayed because of IRS investigating into this.|||Think about it. Who has the time necessary (or the wrist health to click so much) to actually make much money in this game? Aren't many of the item sellers in China anyway with storefront businesses operating from a PO box in Europe and the US? What one person can farm that much stuff to make any real money? Who has that kind of time? Bots are banned every so often so you would have to make new bots and new accounts to use then in anyway.
On a side note, you can earn up to $600 and pay no taxes here in the States.|||Another ridiculous and (imho) poorly thought out thread.
I will be surprised if:
1) There is any scope for making as much money in this game as some people think there will be.
2) That with much-reduced botting anyone who does make any kind of chunk of money, (again, unrealistic) after paying-back for the cost of the game back, will do anything but spend that money on cooler items.
3) The IRS cared - much in the same way as about small amounts of eBay trading.
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