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It's Just A Game, Or Is It? Real Money, Real Income, And Real Taxes In Virtual Worlds, William D. Terando, Brian E. Mennecke, Diane J. Janvin, William M. Dilla

William D. Terando

Virtual worlds like Second Life offer players opportunities to earn real-world income through their activities in the game. It will not be long before governments begin to establish policies and regulations regarding the income generated by players of these game environments. This paper examines the issue of taxes in virtual world games. Two alternative places for recognizing income could be established by regulators: 1) at the point when in-game transactions take place; or 2) when players convert game assets into real-world currency. We argue for realization of income, and therefore taxation, at the exchange. We expect that burdensome policies such …