Heads up: RMAH earnings = income for tax purposes.

#21PijinzPosted 7/17/2012 11:20:43 AM
Speaking of hobby/trading rules, again I can't speak for the US but in the UK it's based on nine indicators:

http://www.hmrc.gov.uk/guidance/selling/badges.htm

Those don't all need to be met in order to qualify as trading.

Now here's an interesting question (again this is UK only): if selling these items qualifies as trading, then would a sole-trader based around the RMAH be entitled to working tax credits? It sounds ridiculous, but I can't see how one could call item sales taxable income without allowing for this.
#22MASKOAAAPosted 7/17/2012 2:58:08 PM
whitelytning posted...
From: user420 | #019
Not true. I thought that was the case but have had two deficiencies for relatively small amounts of money. $1800 in 2009, and $4500 in 2010. I am also a very avid poker player and continuously hear stories about people that have had issues with small tournament winnings that they didn't report. The IRS wants their cut of any income you make. If there are discrepancies in what Blizz reports to them and what they see from other people they won't turn their back on it.

Winning a poker tournament |= selling items from a video game.

$1800+ really isn't a small amount of money either. A few hundred maybe, a few thousand not so much.



Its not that different than a poker tournament at all. Its the same concept. If a player gets third in a small tournament and gets paid a few hundred bucks the casino takes his name and sometimes SSN. When the casino reports that they paid that money the IRS is interested in collecting a tax on that players income. If they can find out who that player is they can then look to see if that player reported the income. If not, there is a deficiency.

If Blizzard reports that they had x amount of commission from items sold by player Y and purchased by player Z the IRS can see that player Y has income. If player Y does not report this as income it is a deficiency. The amount doesn't have to be extremely significant. Just enough that it is worth their time to come after you to collect it.


Are live tournaments diff then live cash at the casino b/c I heard you had to win 10k before they inform the IRS, I've had nights were I won 2k in cash games and all you simply do is cash out.
#23dogmoneyPosted 7/17/2012 3:42:43 PM(edited)
My credentials: I'm an Enrolled Agent. I've written this: http://www.onelinetaxcode.com.

The requirement for Activision to send out 1099MISC is $600 earnings, which specifically means that once you have $600 of RMAH earnings they must send you a 1099MISC. Activision can potentially send you a 1099MISC for $1 of RMAH earnings. It will be in Activision's best interest to distribute as many 1099MISCs as feasible, because that is income distributions which they will be able to exclude on their corporate returns. I have yet to see any official statement from Activision regarding what amount of income will prompt them to distribute a 1099MISC.

As stated previously; technically, even if you don't get a 99MISC, you are still required to report RMAH earnings regardless. Same as mowing a lawn or holding a garage sale. This applies even if you have RMAH earnings in balance only and haven't cashed it out.

My personal opinion about D3 business expenses is that they would only hold water if you managed to maintain very specific records about your time playing the game as well as have separate property used to run the business. Expenses would have a better chance at being allowed if, for example, you bought a separate laptop to run D3 and you can demonstrate that you don't use the laptop for literally anything else. Of course, doing all of this breaks the RMAH TOS, as it states that you are not allowed to use RMAH "as an investment vehicle".
#24user420Posted 7/17/2012 3:50:45 PM
The amount doesn't have to be extremely significant. Just enough that it is worth their time to come after you to collect it.

That's my point entirely; it's not worth the time/expenses it would cost them to go after John Q Diabloplayer cuz he sold a rare Mace.of Asswhoopin for $5.
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#25PijinzPosted 7/17/2012 4:04:13 PM
dogmoney posted...
My personal opinion about D3 business expenses is that they would only hold water if you managed to maintain very specific records about your time playing the game as well as have separate property used to run the business. Expenses would have a better chance at being allowed if, for example, you bought a separate laptop to run D3 and you can demonstrate that you don't use the laptop for literally anything else. Of course, doing all of this breaks the RMAH TOS, as it states that you are not allowed to use RMAH "as an investment vehicle".


Well that's only going to apply if you're claiming electricity and internet costs as expenses. The cost of the game and an authenticator is pretty clear cut. You don't need a separate property unless your mortgage specifically prohibits it (again I'm from the UK, so this might be different in the US). You can actually calculate an average cost for things like electricity and internet if you keep full accounts of how long you've played and when, though I wouldn't really advise anybody to do this as you're skirting with danger claiming things like that.