CosmicV wrote:

This is valuable as an inside scoop to the mental workings of a politicians...
"The idea of Second Life or World of Warcraft or some of these other synthetic universes, they have trouble wrapping their head around it," he said."

Oddly enough, economist for a game like this is one of the hats I wear, and this sort of thing presents some nightmarish problems. Dealing with straight capital gains in this area is something doable. You buy something for x dollars, you sell that something for x+y dollars, and you end up taxed on the y dollars. That's pretty straightforward. Dealing with some of the other issues though is hell. How to you do valuation on something that could literally be gone tomorrow? Or something you've spent money on but you lose because your account has been banned for breaking the game rules and now you have nothing? Or the company goes belly up and the game shuts down?

Throw in government oversight and you could be looking at a boondoggle that breaks the backs of companies. For Second Life, where they handle buying and selling of in game money directly, they already have the sorts of tools that make this sort of reporting easy. Go over to World of Warcraft where Blizzard has banned thousands of accounts for offline trading, and you're in a whole different mess.

This is a pie the IRS would love to stick their fingers in. It's also one they could destroy with a few tentative pushes.

RE: Science & Technology at Scientific American.com: Virtual economies attract real-world tax attention