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

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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