Paying Taxes on Everquest Booty.

February 13, 2006
There is this great story on NPR that I picked up on their business podcast. It seems that Uncle Sam might be interested in your activities in Norrath. It turns out that since virtual items and gold won in games has real world market value, winning them creates real-world taxable gain. Right now, for example, gold in EQII is selling for $50 real world money per 1000 EQII “gold.” Say over the course of a few months, your character generates 2000 gold. You’ve just earned the real world equivalent of $100 income which is taxable in real life, even if you don’t sell it. Now I suppose you might be able to offset the “cost” of your monthly subscription to EQII, but I don’t know. 

Now suppose you find a really rare sword and you trade it to someone else for a shield. The NPR report says that this could be considered barter trade and you could be taxed on that as well.

My favorite mental picture is going through an audit:

Auditor: Now, er, Mr. Thaed.
Thaed: Yes?
Auditor: It says here that your occupation is “Necromancer.” What exactly is that?
Thaed: Oh, I animate dead things to kill monsters.
Auditor: I see. And you made $100,000 gold doing it?
Thaed: Business was good, I killed a dragon!
Auditor: I see.

The thought of the millions of people throughout the country playing MMORPGs and then getting 1099s from Sony at year-end is really thought provoking. The guy in the article says he’s not going to be the one asking the IRS for an opinion on this because he would feel the wrath of gamers everywhere. I figure he’s already let the cat out of the bag by calling the IRS and talking to NPR. Talk about changing the face of gaming as we know it!


One Response to “Paying Taxes on Everquest Booty.”

  1. deorward Says:

    thank you for your work

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