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The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Virtual land as a business?
 
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Gazpacho
Jun 18, 2004

by Fluffdaddy
Slippery Tilde

Justinen posted:

I had thought it would take far longer for a real measure of success but it seems if I keep this up the land may potentially pay itself off in 3-4 years. That is like an insane 20-30% ROI right?
Depends on what you mean by "pay itself off." Cover withdrawal and other fees? Cover some debt that you've taken on to do this? In either of those cases the return doesn't go to you. Double in value? There's little reason to expect that to happen with arbitrarily chosen game land, but it would be a 19-26% annual return if it did.

Justinen posted:

The income is going to sit and build unless it would be smarter to withdraw it in smaller amounts. Is there a penalty or tax reason that I should withdraw it smaller? Will a $4,000 withdraw from a game into my account get me a red flag on taxes?
Under US federal tax law, taxation would likely apply when you sell land for entropias, regardless of whether or when you withdraw the entropias. It would be simplest to withdraw at least enough after each sale to pay tax, and you should not reinvest funds that you owe for tax.

For individual taxpayers, capital gain on investments is taxed at the ordinary rate if the investment was held less than a year, and at the lower capital gain rate if held at least a year. In deciding when to sell land, you would want to consider the different tax rates as well as the bracket structure of each. Withdrawal fees occur separately from sale transactions, so you cannot count them against the gain. Even though entropias exchange with dollars at a fixed rate, they are a virtual currency and you would have to check the box on Form 1040.

Creating a legal entity might help you capture expenses like withdrawal fees, but I'm not an expert in that area. It's not a real estate business.

Gazpacho fucked around with this message at 16:25 on Apr 22, 2022

* # ¿ Apr 22, 2022 16:10
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The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Virtual land as a business?