Charlotte Bartlett

I am so excited for this. This was requested in a long ago thread about marketplace enhancements then we popped the Jira in. Thank you LL! This is such a great feature.

Counting my 500 dollar notes right now including the whole bank pile. 😂

I think what that writer meant to put was Linden Research Inc. has been defined as a Money Service Business (their registration is 31000118037625) versus that the Linden dollar specifically has been classified as a virtual currency back in 2013. Their classification is 409 as a Money Transmitter. Effectively, that means they transfer funds or provide payment services - not that L$ therefore is a virtual currency as a result of that registration. I am wading through material as I am not sure how that writer confirmed his statement that L$ was specifically defined as a convertible currency as even in the guidance from Fincen I would strongly question how L$ fits that profile except for the "value" part or whether he made that assumption on the basis of the MSB filing alone and mis spoke. So in summary they may have that status simply as they send us USD when we cash out, or they may have it due to the cash out AND the fact they are an Administrator of an exchange. Their classification papers do not differentiate. Either way, it's confusing with the guidance from FinCen over convertible currencies versus the registration aspect that occurred at a different time. I certainly would not be going against my CPA on the basis on a writer's article (even with his credentials) there needs to be a clear communication from @Linden Lab on whether any of their MSB filings or TPSO status have led them to believe the L$ is now considered a virtual currency. Until they do, I am going to stick with their TOS statement as my defense.

Also this isn't a new question - I found a piece back in 2013 from Inara Pey along with Mona Eberhardt and Trinity Dejavu asking the very same question as FinCen definition would tack it as a virtual currency despite the TOS wording which was changed from currency to token historically.... Who knows! I am going to follow my CPAs advice and hope for the best but may put additional funding aside in case it is a virtual currency.

it's what I have always used too. But reading the IRS paper that came out in November 2018, I have to say I think Luna's CPA may be on to the fact that regardless of the TOS. L$ because it is exchanged for USD between players via a TPSO it's has become a virtual currency under IRS treatment. Unless LL give us more guidance, it's us merchants who will end up navigating whether our particular CPA got it right or wrong. The TOS does help I think though as a defense if we have got it wrong along with the CPA I hope!

On the OP - this is not new - LL have been classed as a TPSO (Third Party Settlement Organization) for some time now, and have issued 1099Ks as a result. However the thing that is not settled for me is are L$ a virtual currency or a game token. If the former, the recent IRS guidance does count. If the later, does it? I know a lot of merchants have used the token method for tax purposes so pay taxes on the point they convert into USD as that's now income. However, if virtual currency the treatment from the IRS was refocused (due to Bitcoin etc) which makes it a much broader reporting need. In November 2018 the IRS published more guidance some bits from that below around virtual currencies: (1) Virtual currency you are holding is treated as "property" by the IRS . (2) Virtual currency is not treated as currency that could generate foreign currency gain or loss for U.S. federal tax purposes. (3) A taxpayer who receives virtual currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, measured in U.S. dollars, as of the date that the virtual currency was received. (See Publication 525, Taxable and Nontaxable Income, for more information on miscellaneous income from exchanges involving property or services.). So this seems to apply in your example of selling a sim. But to then confuse us some more: (4) For U.S. tax purposes, transactions using virtual currency must be reported in U.S. dollars. Therefore, taxpayers will be required to determine the fair market value of virtual currency in U.S. dollars as of the date of payment or receipt. If a virtual currency is listed on an exchange and the exchange rate is established by market supply and demand, the fair market value of the virtual currency is determined by converting the virtual currency into U.S. dollars (or into another real currency which in turn can be converted into U.S. dollars) at the exchange rate, in a reasonable manner that is consistently applied. (It doesn't state you have to sell the L$ to realize the fair market value, just simply determine it). Also I noted in recent advice (again assuming L$ is a virtual currency and not a token), if you pay somebody in L$ e.g. you have a contractor, blogger manager etc - they are also required to report that L$ income using the same rules above (and far wider rules ofc) and if you pay them over $600 USD in the year if you are treating them as an independent contractor there is more reporting for you to do. It gets even more tricky if they are a NON US person as there are withholding requirements to navigate. With wider points: let's say you sold that sim for over USD 600 equivalent so for the purchaser and seller: (5) Payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property. For example, a person who in the course of a trade or business makes a payment of fixed and determinable income using virtual currency with a value of $600 or more to a U.S. non-exempt recipient in a taxable year is required to report the payment to the IRS and to the payee. Examples of payments of fixed and determinable income include rent, salaries, wages, premiums, annuities, and compensation. Question is how would you know where your sim purchaser lived, or if you are the purchaser yourself where the seller lived (this would fall on LL I guess who facilitate sim transfers and still technically own the sim - who knows haven't read the TOS in a while?). The million dollar question for me. Is L$ really a virtual currency or a game token..... 🙄 Does LL being a TPSO point to virtual currency or just because they facilitate the exchange and cash out to USD is that why they are classed as one - needs a professional to figure that out. LL's TOS points to a game token. 3.1. "Linden Dollars" are virtual tokens that we license. Each Linden Dollar is a virtual token representing contractual permission from Linden Lab to access features of Second Life. Linden Dollars are available for Purchase or distribution at Linden Lab's discretion, and are not redeemable for monetary value from Linden Lab." and further in "You acknowledge that Linden Dollars are not currency or any type of currency substitute or financial instrument, and are not redeemable for any sum of money from Linden Lab at any time." I spoke to two CPAs and both differed on opinion! So it's tough for any merchant really to get this right I suspect unless LL come out and clarify their TPSO status rationale and whether the L$ is a virtual currency or a token. Also we do need to clarify if a token falls under the IRS definition of Virtual Currency (both CPAS differed on this one thought yes, one thought no) which is in opposite to LL TOS technically but linked still to the TPSO part and the fact whilst LL won't buy them other residents do so they have "value".

I think what you are looking for a lot of other people are too. The trouble is we don’t always know what that is. If you ever want to sketch a layout that would be your dream home and have a Pinterest of images you love, I would be happy to take a look.

Love the Gacha one!

that's not really what I meant. It's more about Q&A like you see on Amazon which allows a far more in depth response/answer/interaction on the product. Versus some review that says I didn't like it, it's blue and the creator who may or may not be notified there was a review (because half the time the notification system is wonky) and be able to respond to that specific complaint. There is a whole thread on this somewhere on this forum, and I remain to this day more than hopeful that LL will remove reviews from Marketplace and replace it with a far more useful mechanism.

Bumping: Thanks @Grumpity Linden do you have any rough timescale for the store owners to add managers to manage their lists - accepted on the JIRA below. https://jira.secondlife.com/browse/BUG-216104 Thanks so much!

I am still hopeful for the day when LL remove reviews totally and instead provide product questions/answers the creator or other community members can answer. \

Those were the days hah! One brand that was more liberal from memory was Coca Cola they let their logo be used or am I imagining that.

Re "Confusion" Historically it has been possible and Adidas HAVE had a presence in Second Life officially many years back. I think any solo creator who thought they could fight a large corporation like Adidas in US court, would be misguided in this example and it's regarding Trade Dress. Financially feasible to fight? I hope you have very deep pockets and the time this will take. 

The stripes are protected under trade dress. In principle, you do not have the right to copy the design in any way shape or form and that includes making a 3d model. 
 In the history of sands of SL, another furniture brand did protect their Trade Dress specifically and make a well known SL creator remove their equivalent items under a legal agreement. It did not however reach court as the creator adhered to the cease and desist. 
 To state a trade dress infringement claim under Section 43(a) of the Lanham Act a plaintiff must meet three basic elements: (1) distinctiveness, (2) nonfunctionality, and (3) likelihood of confusion.
 Honestly at the end of the day back to the OP - their post states already it looks like a copy of the brand, historically we can show Adidas has had official products within Second Life.... so has confusion been caused, have they, in their mind, linked that shoe to the brand? Also the quality of the 3d model. If, well poor, could it lead a court to infer that the fact that 3d model exists and linked a consumer's thought to Adidas, it is therefore likely to harm Adidas' reputation? Confusion does not necessarily mean you think it comes "from" the brand directly. Perhaps this is a marketing gimmick etc authorised by the brand. Adidas have already got precedent in US courts (and recently) showing those stripes have become a design that is recognisable (point in case, the OP recognised them) and they are not functional, so they have protectable trade dress on them. Applying those stripes to stickers, websites, 3d models, whatever derivative medium you want to chose, would therefore I suspect (highly) to be a infringement on that basis. US law in this area is highly complex, so any creators reading this please never EVER think it's the right move to go to court on a quick sand defense for trade dress infringement. Get an IP lawyer (better still stop copying trade dress items and bringing harm to SL's reputation and other creators here - make your own stripes up it's NOT hard).

Thanks @Grumpity Linden do you have any rough timescale for the store owners to add managers to manage their lists - accepted on the JIRA below. https://jira.secondlife.com/browse/BUG-216104 Thanks so much!

I am not disagreeing, just that you are paying tax on the realized currency (USD) not the L$s.