Current Events > Tax Help for Hypothetical resell Scenario

(+) Yeah! (+)

So I am dreaming of lucky loot in the mmo I just started and of getting r/l money while marketing stuff ingame. So when you do this you have to pay income tax. How much of my money could I hang onto? Would I have to pay a straight percentage or could I get deductions? Which deductions could I claim?


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I'm a CPA but I don't have experience with MMOs. I'm not sure I understand what it is you're doing. Are you playing a game and advertising stuff on your profile, and the advertisers are paying you?


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Let me emphasize that this is hypothetical. I am playing the game but I do not have stuff anyone would want and I have not leveled to a point where I can trade.

In terms of taxes does it matter how the information of what I have to sell is disseminated?

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metallica846 posted...

Would the IRS ever know you received this money?

I dunno. Maybe if one of the buyers got audited by IRS or I donated to an organization that the government is watching.

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EndOfDiscOne posted...

I'm a CPA but I don't have experience with MMOs. I'm not sure I understand what it is you're doing. Are you playing a game and advertising stuff on your profile, and the advertisers are paying you?

cool, didn't know another CPA was on the board.

I feel like this guy wants to farm items and sell for cash from the first message

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krazychao5 posted...

cool, didn't know another CPA was on the board.

I feel like this guy wants to farm items and sell for cash from the first message

Dreaming. I am level 4.

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so how are you "hypothetically" making money? i presume basically anything you do with a game would be considered hobby income, which is not ideal

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I'm also a CPA. Can't say I have much experience with this, but it sounds like you're talking about selling in-game items for money, right? if you're making an actual business out of it, it'd just be like income from any other business.

If it's a once-or-twice type of deal, I imagine it'd just be considered a personal sale of your own property, in which case...you're still supposed to report it as income...but hardly anybody does for that type of transaction because it isn't reported to IRS.

Mind you, amount is important. If it's $100 nobody will care. if it's 100K I'd be a lot more cautious.

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The short answer is yes. The CPAs can probably explain better (or tell me Im wrong) because it would depend on the transaction but if you farm an item or gold and then sell that item for cash (or even if you dont) it could be considered income for tax purposes. I understand that it would just be added to your gross so you wouldnt pay more of a % unless it changed your tax bracket.

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