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Taxes question due to Second Life


treto Priestly
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I have a computer I bought this year that I mainly dedicated for Second Life use because I do make over $2,000 a year and needed a computer that could run SL well. Since I have to fill out a 1099 and this computer is used for SL and other RL business reasons would I be able to use my computer as a tax write off?

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Since you are filling out a 1099, you are probably paying US taxes. Even if you activity is regarded as a Hobby, you can deduct as expense up to the amount you made. The computer is a capital asset, though, so you must spread the deduction over the life of the computer.

I used to be in business. At that time, the life of a computer was 5 years for tax purposes. There were schedules you could use to spread out the deduction. You need to study the IRS rules or get advice from a tax accountant.

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One of the nicer things that the UK did for IT equipment was to allow it to be deducted as an expense in the same tax year, a much simpler concept than having to capitalise it as it was previously.

 

Even if it's only part used for business though, I would expect that a percentage could be accounted for deductions.

 

As suggested though, talk to a US tax consultant.

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I believe you have to prove that you don't use the computer for ANY personal use, including anything you do in SL that is not directly connected to your business. If you can't prove that, then you may have to figure out what percentage that you use it for business only.

If I were you, I would definitely consult with a professional tax advisor because home office deductions will sometimes trigger an audit and you don't want that.  It may not be worth your while to take the deduction under the circumstances.

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