Need Legal Advice from Daybreak please.

Over the course of my engagement with the Ragefire so far, I've been fairly lucky. I've bartered my virtual winnings for over 60 Krono so far on this server. Now, I feel that this puts me into a very sticky dilemma. I'm currently looking into buying a new home, paid in full, which will greatly increase my risk of an audit in the coming year during tax season. To my knowledge, any virtual transaction where time is involved, and something has an actual established Real-Life value (Krono), the trade is considered Taxable under Bartering, via IRS Publication 525, the exact moment that the trade is completed, even in a Virtual World Setting.

Does Daybreak games report all Krono Trades to the IRS?
In the case of an audit, does Daybreak games keep accurate logs of all my trades done in the past 3 years, as would be checked in an audit?

As a responsible American, I feel I'm obligated to report my Krono income to the IRS voluntarily, so the more information that could be given in this situation would be greatly appreciated!




References:
IRS Publication 525 - http://www.irs.gov/pub/irs-pdf/p525.pdf

http://www.irs.gov/Businesses/Small...ax-Consequences-of-Virtual-World-Transactions

http://www.legalaffairs.org/issues/January-February-2006/feature_dibbell_janfeb06.msp

http://money.howstuffworks.com/personal-finance/personal-income-taxes/virtual-tax.htm

Also, is there a certain Krono amount where DBG is obligated to report a certain individual to the IRS? I would imagine there would be some sort of limit in place. (100 Krono = 1,799.99 USD in Value)

i'd think that once the purchase is completed that kronos lose their real world value. The monetary value is removed from the krono and instead it becomes time on an account. I say this because I don't think you can legally sell kronos for real money that isn't a private transaction behind close doors.

You know, they've got a lot of smart lawyers and other guys at the IRS. I assure you, they don't need your help getting anything they think is due them.

It doesn't matter if income was generated legally or illegally, it is still taxable.

From what I've been reading, any transaction that has an established real-world value is taxable. Kronos would not lose that value, as they still provide at minimum a 14.99 Subscription. 100% Taxable.

the only way this wouold be taxable income is if you profited from the resale for actual US CURRENCY, this is a virtual item ,,,.talk to an accountant dont ask for advice on a freaking msg board.

Example you trade lets say 15 gallons of milk you bought from HyVee for 30 loaves of bread from Walmart...they have value but would you have to pay tax on them? No

Knock yourself out and report your own "income" and see what they say. Let us know. It might be interesting.

From the United States Government Accountability Office:

Some virtual economies may function similarly to barter exchanges**, where bartering is the exchange of goods or services in lieu of monetary payments. For example, a carpenter may build a desk for a dentist in exchange for dental work. Barter transactions are taxable transactions, and taxpayers must report the fair market value of the good or service received on their tax returns.

**The term “barter exchange” means any organization of members providing property or services who jointly contract to trade or barter such property or services. 26 U.S.C. 6045



In this depiction, EverQuest is a Hybrid model. U.S. Dollars can be used to purchase Krono, which then is considered a form of currency, since it can be used to buy "items" from other players. The Krono still maintains a Real-World value, and is maintained as a "Real goods/service" since it operates as a 14.99 Subscription. I would imagine there's a set "stock" amount that Daybreak would monitor for before reporting this?




Reference: http://www.gao.gov/assets/660/654620.pdf

How can I begin to move my business of RMT'ing kronos online for real money, to an offshore swiss account in order to avoid paying taxes? Should I launder it through the mafia?

My point was, that you don't even need to sell the Krono for it to be taxable.

Free time police.

Having done taxes for people this past year I can tell you virtual currency, such as bitcoin, or in this case krono, is reported as property and not as income.
In your case I don't think its worth sweating, but that's just my opinion.

So in reference to Q-3 in http://www.irs.gov/pub/irs-drop/n-14-21.pdf you had the people you did taxes for claim Bitcoin (or would in my case, Krono) in their gross income at market value?

60 krono and a new house? I'm thinking this is a brag or troll thread, not sure which. Either way, 60 krono won't buy you a new house. It might make one rent payment.

Clearly not buying a house with Krono. House plays into audit risk, and clearly I'd want to be as forthcoming with the IRS as possible, hence the Krono!

I know in Second Life, you can cash out their virtual currency and people do report the income from the game to the IRS, though that would be closer to the people making stuff for the marketplace then selling Krono's

60 krono = 18.00 x 60 = 1080.00

Like I said, maybe one house payment, and assuming you sell those krono for the same amount that DB is selling them. In order to compete, you would have to sell them slightly cheaper, which means less than the posted amount.

You could sell gear you purchased with the krono; at the current exchange rage for gear on Ragefire it would also be slightly less than the above posted amount.

DBG receives the cash from the original transaction, not you. You also cannot sell the krono without doing something illegal.

Any transaction which converts the krono that you have in to cash is also illegal.

So again, I say, this is either a post meant to brag or a post meant to troll, possibly both.

Are you really posting about selling krono illegally on a sanctioned game forum? In any case, that shows a severe lack of wisdom.

60 Krono so far, in this current year. Considering it was 60 Krono in one month, and theres another 6 months remaining in the year, 60x6x17.99, assuming my gain of Kronos stayed steady ($6476.40 value). And since Krono has a real-world value, it would seem it should be claimed into Gross Income on your taxes. It's an asset of yours. You wouldn't have to sell them in order to make the taxing applicable.

Now, if only trolling were taxable, we could wipe out the national debt in a month.