Are MMORPG goods theoretically taxable?

[Fornic]

arstechnica.com has an interesting article on the economies of MMORPG's and the taxable implications therein.

http://arstechnica.com/news.ars/post/20060106-5923.html

So if you make your salary playing a game and selling virtual goods do you have to pay taxes on it?

[Ddrak]

Of course it's taxable. You make money, it's income, it's taxable.

Dd

[Knott]

Its not that cut and dried Ddrak. In the state of Iowa, services are not taxable. If you are selling an account or plat you are actually only selling the time put into the account or plat and not the actual item. Therefor this is just a service and can not be taxed.

I don't know how it is now but also when selling something over the internet across state line it used to be the buyers responcibility to pay the tax as no sales tax was charged. I worked for a company that set up online shopping to avoid charging sales tax to Iowa costumers who happened to live within 1 mile of the store because we lived on the Mississippi river and that was the state line.

Looking deeper in the matter, If I were to buy an item on ebay for say $100 and turn around and sell it for $150, am I obligated to pay taxes on the $150 or just the $50 or am I obligated to pay sales tax at all?

In todays day and age, more and more people are making a living online and avoiding alot of taxes. I am not saying I agree with this as I am a believer in supporting the economy but on a virtual item you are selling the time put into the acquisition of said item and not the actual Item as it is owned by SoE.

Just being silly but also in Iowa there is no sales tax on food items. If I bought stat food for EQ over the internet should I be charged sales tax? hehe

[Knott]

Thought I would clearify a bit...

Say I was to hire a mover to help me move from one house to another (Which I recently did). That mover can charge me for any consumable items such as bubble wrap, paper, boxes, ect... but can not charge me tax on the labor for moving my household items as it is a service. He can however, and did, sell me the gas in the truck and tax that.

[Ddrak]

Knott,

It is absolutely cut and dried. The article is talking about federal income tax. Income earned in any state, from any services or sales whether same state or not is taxable and should be declared on your tax forms.

In your example, the mover has to pay income taxes on the money he charges you when he files his taxes in April.

Dd

[Knott]

Agreed Ddrak. I was looking at it from a sales tax perspective. Looking at what you wrote you are right. Sales tax should not be confused with income tax.

[Dost]

dont forget to deduct the costs of your computer and internet service though