... well this feels different

Business Gaming

Death, Taxes, and Diablo III

Comments (7)
  1. Anonymous says:

    I don't believe this is the case in Canada, where earnings from hobbies are generally not taxable. In Canada, the tax code stipulates that earnings are taxable only if they are from one of the mandated sources (earnings from business, etc.). Hobbies (in this case video games) are not akin to earnings from a business and therefore wouldn't be taxed.

  2. tushar nene says:

    are there any guidelines in the Canadian tax code that tell you how to draw the line between the two and the conversion of a hobby into a business? Just curious, because i know the IRS does, but i know pretty much nothing about how the CRA operates.

    This post was specific just to the USA and my interpretation of the real money auction house terms of use for the United States and the definition of income. If any tax professionals reading this want to discuss then that would be great!

  3. Anonymous says:

    But note, all sales are deemed to have occurred in the USA, such that at least some sort of USA tax would apply to all. Not sure how they'd come after you though.

  4. Anonymous says:

    "10. TAXES. You are responsible for taxes incurred when you use the Auction Houses. All auctions are deemed to occur in the United States of America and are subject to all applicable state and federal tax laws and regulations. Proceeds from auction sales may be considered income for tax purposes. You should consult with a tax specialist to determine your tax liability for these transactions."

    But they are all deemed to occur in America. Not sure how the long arm of the tax law works, but theoretically the IRS may still have a legal claim – not sure how they'd enforce it on foreigners though

  5. Chad Stewart says:

    Interesting question: Can you write the cost of the game off in that case? Would be interesting to hear from a tax professional.

  6. tushar says:

    Chad – in my non-professional opinion you wouldn't be able to write off the game cost as an expense because of the delineation between hobby and business. (also I'm sorry! for some reason blogger had you flagged as spam until i fished you out!)

    to our Anonymous friend flying the Maple Leaf (I'm guessing) – I know the EU has slightly different terms of use which doesn't have the clause indicating that auctions are understood to take place in the USA. I've yet to see any specific terms of use for any other country in the Americas – stranger still I don't think you can even use the RMAH in Canadian Dollars. As far as foreign enforcement I have no idea. All I know is that in the USA you have to report income made in other countries – I'm guessing that's a similar CRA rule.

    the whole thing here (again, my non-professional interpretation) is that even if 100% of your income from all sources may not be taxable, it's definitely reportable.

    if any tax pros are reading this jump in here!

  7. tushar says:

    this post was picked up and linked on the centre tech law blog here: they go into a little more detail on the rules here: Center Tech Law Blog

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