Can someone help me with LL Contest TOS? Taxes?

[Carl Thibodeaux]

Using this one as a example, as it is the most recent one.. http://wiki.secondlife.com/wiki/2015_Photo_Booth_Fun_Snapshot_Contest

 

I am curious, but do you have to pay taxes on whatever they reward you?

[Celestiall Nightfire]

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Carl Thibodeaux wrote:

 

I am curious, but do you have to pay taxes on whatever they reward you?

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Possibly.

From the contest rules:

E. All federal, state, local and or other applicable taxes, licenses, title and/or registration fees or others costs, associated with winning a prize are the sole responsibility of the Winner(s). The Sponsor and its affiliates, subsidiaries and advertising and promotion agencies, and each of their directors, officers, employees, agents and assigns, shall not be responsible for any such taxes, fees and costs.

You should check the tax, and contest laws, in your area if you're concerned. 

If in the US this may be helpful:

http://www.irs.gov/uac/Reporting-Miscellaneous-Income

Also, check your state website if in the US.  Other countries probably have similar information type websites.

[Sassy Romano]

You expect to pay taxes on game tokens? Prizes are L$ so it wouldn't be income until cashed out. 

[Celestiall Nightfire]

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Sassy Romano wrote:

You expect to pay taxes on game tokens? Prizes are L$ so it wouldn't be income until cashed out. 

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Sassy, the IRS expects people to report prizes (even if it's not "money"), bartering, and other material "gains". 

See the link I posted in my eariler comment.

From that IRS link:

 

"Prizes and awards

Subject to certain exceptions, the cash value of prizes or awards won in a drawing, quiz show program, beauty contest, or other event, must be included on the tax return as taxable income.

Taxpayers must also report the fair market value of merchandise or products won as a prize or award, as taxable income.

For example, both a $500 cash prize and the fair market value of a new range won in a baking contest must be reported as other income on Form 1040, Line 21."

[Dresden Ceriano]

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Celestiall Nightfire wrote:

Sassy, the IRS expects people to report prizes

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Celestiall, the IRS probably expects me to report my fiance shoving a quarter up my ass in gratitude for a service well performed.  In which case, I'm fully supportive of them reaching in to extract their percentage... I'm just hoping that they're willing to dig rather deeply in order to find it.

...Dres

[Sassy Romano]

Yes, value of a cash prize.  L$ have no value unless cashed out, otherwise as Dres said, every time that a resident transferred L$ to another US resident, you'd be calling that "income".

Being given a car or a camel has a direct value.  L$ have no value while they remain within SL.  How about if I give you the gift of one of my L$1,000,000 poseballs, you'll declare that?

[Dresden Ceriano]

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Sassy Romano wrote:

How about if I give you the gift of one of my L$1,000,000 poseballs, you'll declare that?

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If you're willing to put those L$1,000,000 poseballs where my fiance put that quarter, I'd most certainly declare.

...Dres

[LlewLlwyd]

THIS is what I like to see!

***A thread that should initially have been posted in Answers being converted into a vulgar discussion; perfect***

[Dresden Ceriano]

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LlewLlwyd wrote:

THIS

is what I like to see!

***A thread that should initially have been posted in Answers being converted into a vulgar discussion; perfect***

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In which case, I expect a rather vulgar engagement ring.

...Dres (Unless you, frankly, don't give a damn, my dear.)

[Bobbie Faulds]

Until you ACTUALLY convert the Lindens to real money, it's not income, just ingame tokens. Once you convert it to real money, THEN it's taxable. Lindens are just ingame tokens until they are converted and have no real monetary value until they are converted. Rather like chips you win at a casino...they aren't real money until you cash them in. Until then, they are just pieces of plastic.

[Celestiall Nightfire]

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Sassy Romano wrote:

Yes, value of a cash prize.  L$ have no value unless cashed out,

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Unfortunately, that's not the way it works for prizes.  The IRS uses "fair market value" to determine if someone has a capital gain or earned income.  So, whatever the USD exchange rate is, that's what would need to be declared.  It doesn't matter if the person doesn't cash it out. 

 

Since LL will report the "fair market value" of the prizes to the proper taxing authorities, it would be up to the winner to declare it on their taxes.  That's why the prize rules mention the winner being liable for the taxes.

 

LL lists the prize values as such:

5. PRIZES.

A. Description of Prizes.

• Grand Prize – 10,000 Linden Dollars (estimated value at US$40.00).

• First Prize – 5,000 Linden Dollars (estimated value at US$20.00).

• Second Prize – 3,000 Linden Dollars (estimated value at $12.00).

• Third Prize- 1,000 Linden Dollars (estimated value at $4.00).

 

 

Which is why they say in the prize eligibility:

E. All federal, state, local and or other applicable taxes, licenses, title and/or registration fees or others costs, associated with winning a prize are the sole responsibility of the Winner(s). The Sponsor and its affiliates, subsidiaries and advertising and promotion agencies, and each of their directors, officers, employees, agents and assigns, shall not be responsible for any such taxes, fees and costs.

 

,

 

 

 

[Coby Foden]

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Celestiall Nightfire wrote:

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Sassy Romano wrote:

You expect to pay taxes on game tokens? Prizes are L$ so it wouldn't be income until cashed out. 

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Sassy, the IRS expects people to report prizes (even if it's not "money"), bartering, and other material "gains".

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I have always thought that when the money (L$), earned in way Second Life, stays inside Second Life it is not taxable anywhere. Only when the money is cashed out then it becomes real world income and thus will be taxable. Just like Sassy says.

[Celestiall Nightfire]

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Coby Foden wrote:

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Celestiall Nightfire wrote:

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Sassy Romano wrote:

You expect to pay taxes on game tokens? Prizes are L$ so it wouldn't be income until cashed out. 

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Sassy, the IRS expects people to report prizes (even if it's not "money"), bartering, and other material "gains".

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I have always thought that when the money (L$), earned in way Second Life, stays inside Second Life it is not taxable anywhere. Only when the money is cashed out then it becomes real world income and thus will be taxable. Just like Sassy says.

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LL is giving a "prize".  The IRS has rules that apply to prizes.  LL is obligated under law to report the "fair market value" of the prize and the information of the person winning it.

 

That is what the IRS will see.  It doesn't matter if the money's not cashed out.