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Bree Giffen

IRS something something virtual currency

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Disclaimer:  I am not a lawyer, an accountant, or an employee of the IRS.  The following reflects my personal opinion and should not be relied on; consult your own accountant.

1099s, yes.  But these do not report $L, they report Process Credit transactions in real dollars.

The Linden Dollar is not a "virtual currency", according to the Second Life Terms of Service.  $L are "tokens" with no intrinsic value.  Therefore, accumulating a large quantity of $L (through tips, content sales, land rentals, etc) is not taxable.  BUT!

When you convert those $L to $USD and do a Process Credit transaction to transfer the money back to your RL account, it's income, and needs to be reported.

 

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