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Taxation Policy In Virtual Worlds: Issues Raised By Second Life And Other Unstructured Games, William Terando, Brian Mennecke, William Dilla, Diane Janvrin
Taxation Policy In Virtual Worlds: Issues Raised By Second Life And Other Unstructured Games, William Terando, Brian Mennecke, William Dilla, Diane Janvrin
William D. Terando
Massively Multiplayer Online Economic Games involving the creation and trade of virtual goods are rapidly gaining in popularity. Although most individuals participate for their own social or entertainment purposes, a substantial number of participants rely on the sale of virtual goods as an important source of real wealth. To date, these economic returns have largely escaped taxation due to the lack of a well-developed body of tax law in this area. This paper examines whether and when taxes should be assessed on virtual world income. We conclude that an in-game sale of a virtual asset constitutes an income realization event …
Valuation And Classification Of Company Issued Cash And Share-Puts, William Terando
Valuation And Classification Of Company Issued Cash And Share-Puts, William Terando
William D. Terando
This paper examines whether investors’ valuations of cash and share-put warrants are influenced by their potential differential effect on firm solvency. It is motivated by the enactment of SFAS 150, which requires that all contingent put warrant obligations be classified as balance sheet liabilities regardless of put type. Consistent with the critics of SFAS150, we show that market participants differentially value cash and share-puts based on their solvency characteristics beyond the firm’s recorded assets and liabilities. Our results add to existing capital structure literature by suggesting that complex financial instruments (such as cash and share-puts) be reported separately from each …