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Cori Sabena

Income tax

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What is the best way to get a list of all the Linden I sold to Usd so I can report it as income?   I can get the pay pal transfers but all lindens that became US dollars is then technically income.

 

Thanks

 

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The information you need is the money you transferred to Paypal. On the Paypal site, you'll be able to see your monthly income - that's what is needed for taxes.

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If you are reporting income being generated from some SL business activities, you should really be capturing all the transaction history from the main SL transaction history log. 

I capture all my transactions for the entire month each month.  The risk of waiting for an entire month is if you forget for a few days, LL stupid maximum 30 day history will screw you and you will miss a few days of transactions that slip past the window.

I also capture all the MP sales transactions from the MP site even though the main transaction history records all MP sales.

The reason I capture ALL transactions is because I want a record of ANY expenses I incurred in SL to operate the business.  For example, if I made 100,000 in January and I paid a monthly rent of 2000L and LL MP advertising for the month of 3000L etc.  then I want to know these and record these as expenses against the income that was generated.

This transaction log will more accurately show you all Lindens that were actually generated from business activites vs if an SL friend for whatever reason gifted you 20,000 because he was a nice guy.

You can then use that NET LINDEN income and determine how much of the Lindens that were sent out to $US cash to paypal was actual income.  Or you could just use the ultra-stable currency exchange and divide the $L net-income by 249 as an option.  Either way... these transaction logs will tell you all you need.

Finally, if you are reporting SL business income, be sure to also include RL expenses related to the SL business.  For example, if you bought a new DSLR camera and or a Software license of Photoshop for $700 or a Wacom tablet or an upgrade to your PC.... consider using a portion or all of these costs as expenses against any income you generated in SL (if for example you used all these to create textures etc.).

Just some thoughts and only my humble uneducated opinions....

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Paypal only reports income information to the IRS on people with:

  •   $20,000 USD in gross payment volume from sales of goods or services in a single year
  •   200 payments for goods or services in the same year

If you don't have either of those things then they won't report anything directly to the IRS. See the following link as a good resource:

https://cms.paypal.com/us/cgi-bin/marketingweb?cmd=_render-content&content_ID=marketing_us/IRS6050W

Yes all lindens turned into US dollars would be considered income so it's a good idea to keep accurate records of expenses as well because those can be used as deductions to offset the amount of taxable income.

Second Life allows you to view and save monthly account statements which include L$-USD and USD-L$ transaction history. You can find the statements by going to secondlife.com and then logging into your avatar account homepage, click on the account button located in the upper left side of the computer screen which opens a drop down menu where you should see a link that says account statements click on that will take you to the statements page and then there's a drop-down menu which features monthly statements for each month since you joined SL.

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I have been a licensed contractor for 30 years. I know what the IRS sees as income. But most people do not report income from small un-reported sources since there is no way they could find it even if they did an audit.  

As long as it stays in Lindens the IRS is not concerned that is just play money as far as they are concerned, thought I believe there was some congress hearings on that because of the second life economy is larger than many countries!  

If if becomes US dollars then it is income.  My question was if there was a simpler way to just to get linden to USD. I know about the monthly reports just seems to be a lot of trouble but if that is they only was oh well.

 

Thanks for everyone input. Thought I might have missed something.

 

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Was not aware of what the report. General contractors will ask for my tax id because they have to report nearly everything.  But even if they do not have to report it the IRS expects you to report all income.

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Qwalyphi Korpov wrote:

 

 If I buy 10,000 L$ and then I convert those to US dollars there's no income involved.

 

When you do that once, there is no income.

But when you buy those 10,000 L$ for a cheaper USD price then you can sell them (for usd or other monetary units), and you do so many, many times a day (like exchange services do), it can cause a taxable income as well.

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What about if i don't live in the US?

My Second Life account is from South America and also my Paypal account.

Now because of the new TOS my only option is to send the money to a US Bank account through my Paypal.

Then, send it to my country or travel to cash it out.

Do I have to report anything to the IRS?

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