C|Net has an article today (Link) discussing what everyone in the virtual world/gaming community has already discussed: the recent suggestion by Julian Dibble (Link) that the IRS might start taxing virtual assets. It’s a time late piece, but it does have a couple things in it worth quoting. Here’s the first:
Dibbell isn’t so sure. He said that while the IRS has ruled that some forms of goods with inherent value–such as then St. Louis Cardinals star Mark McGwire’s record-breaking home run ball from 1998–are not taxable assets until they are sold, that may not always be true.
Wait a sec. A famous baseball has “inherent value”? Did he or someone actually claim that? Well, when someone can point out how it’s demonstrably different than any other baseball out there, maybe that will make a little sense to me. As far as I’m concerned, it’s just a baseball.
Now here’s the second:
To Joseph Bankman, a professor at Stanford Law School, the question is not one game players or publishers should worry too much about.
“I think the common-sense answer is that the IRS wouldn’t and shouldn’t go after folks until they sell the assets,” Bankman said. “The common sense reason for this is that for most folks, the ‘assets’ represent enjoyment value–what we call imputed income–that’s not taxed. It’s a little bit like getting an autograph of a baseball player or movie star. You could sell the autograph, and folks do, but we don’t tax folks who get the autographs and don’t sell them.”
I like common sense.