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I think cash out itself will open a can of worms as well, If you can turn money you earn in the game into real money, doesnt that become earned income and therfore potentially taxable?
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That is something to consider...if anybody here has experience with this in Second Life, perhaps they could give us a firm answer.
[/ QUOTE ]I'm not familiar with SL, but I'm familiar enough with tax law to comment.
Any income, regardless of the source, is taxable and, therefore, reportable. For most people, failing to report a few bucks here and there that they got from odd places is not likely to get them into any kind of trouble unless they get audited.
If, somehow, you get flagged for an IRS audit, and they find out you've been generating a profit from SL (or, soon, TSO) and haven't reported your earnings, well... Let's just say it would suck to be you!
Additionally - by law, Linden (and, soon, EA) must report earnings in excess of a certain amount. I don't recall what the amount is, but it's not very likely the threshold will be reached in TSO - however, it is very reachable in SL. I'm also not too sure how this can happen without requiring social security numbers or TINs...
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Kat (and anybody else that knows):
I know that this differs from state to state, but I remember in LA we were told we did not even have to file as self-employed until we'd grossed (not net) $5000 in a year from anything we did. Would earnings from TSO/SL or anywhere else not fall under the same thing.....if not a high amount like $5k then a lower amount that one could make before getting into deep trouble with the IRS?