EBay's Second Life: When Should Virtual Earnings Bear Real Taxes?

Yale Law Journal, Pocket Part, Vol. 118, p. 136, 2009

Indiana Legal Studies Research Paper No. 124

7 Pages Posted: 26 Feb 2009 Last revised: 18 Oct 2015

See all articles by Leandra Lederman

Leandra Lederman

Indiana University Maurer School of Law

Abstract

Millions of people participate in virtual worlds. The popular virtual world Second Life is designed to be a platform for commerce. This essay argues that profits received in the form of Linden dollars (Second Life's currency) should be taxed in much the same way profits received via PayPal, a widely used electronic-payment system, are. Although Second Life profits could instead be taxed once the taxpayer cashes out, that would create a special exception for Second Life that does not exist for platforms such as eBay, which would facilitate abuse and distort economic activity.

Keywords: Virtual worlds, MMORPG, Second Life, World of Warcraft, eBay, PayPal, taxation

JEL Classification: H20, H23, H24, K34, O33, O38

Suggested Citation

Lederman, Leandra, EBay's Second Life: When Should Virtual Earnings Bear Real Taxes?. Yale Law Journal, Pocket Part, Vol. 118, p. 136, 2009; Indiana Legal Studies Research Paper No. 124. Available at SSRN: https://ssrn.com/abstract=1339568

Leandra Lederman (Contact Author)

Indiana University Maurer School of Law ( email )

211 S. Indiana Avenue
Bloomington, IN 47405
United States
(812) 855-6149 (Phone)
(812) 855-0555 (Fax)

HOME PAGE: http://www.law.indiana.edu/people/lederman

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