sl money can be taxed by the irs?

[NeoMaximus Brandenburg]

Can profits on SL be taxed by the IRS?

[Storm Clarence]

When you take the L's and convert to dollars and withdraw then yes it should be reported.  However, you may be able to write off other SL costs and Internet usage against the earned dollars - but I am not an accountant.

[Rolig Loon]

So long as you keep any $L earnings in world, they cannot be taxed.  After all, L$ are not real money.  They are tokens.  You can decide to sell your L$ for "real" money.  If you do, then they are taxable income, just the same as the income you'd get from selling anything else in RL.

[Knowl Paine]

For  U.S. Residents there is a possibility that Profit from Income could be subject to taxation by the I.R.S.

Most revenue generated in SL would be unlikely to exceed the Standard Deduction ($5800 for single individuals, $4875 for married filing separate returns, $8600 for heads of households, 2011 ).

How you structure your SL business will greatly influence your degree of tax liability. You need to have a cost of doing business. Subcontract aspects of your endeavors you find disfavorable. Keep an accurate record of your "costs" in SL. 

 

[Knowl Paine]

Good point.

[George Orellana]

They are only taxable if you convert them to $USD and withdraw it. This year any amount over $400 is taxable.