Death of Gemstone

[~Rocktar~]

Switch to bitcoin or other cryptocurrencies. Problem solved.

Pretty sure mortgage and utility companies are not keen on taking Bitcoin.

[Solkern]

They're also trying to apply this to people personal bank accounts... so any transaction over $600 dollars can trigger a look at your bank statements by the IRS if they want to... and see everything you choose to spend your money on.

Hopefully that doesn't make it in... but I'm sure the dumbasses who think the Voting Rights Bill being pushed is actually about Voting Rights won't pay any attention to the actual details either... so we're pretty much fucked because of uniformed, headline reading, self-righteous dipshits.

Just send less than $600 and you’re fine.

[ClydeR]

Is your complaint that people who were cheating on their taxes won't be able to anymore?

[Whirlin]

Actually... I went back and thought about it last evening... This may be one of the best things to happen to Gemstone. They're forcing Tax compliance by treating hobbies as small businesses by reviewing transactions is the dumbest thing for the IRS to do.

Standard disclosure. Do not utilize my statements in this post as direct tax advice. These thoughts is predominantly driven by tax theory from my master's degree in the later 2000s, and not direct section by section breakdowns of the 2020+ code. Discuss these matters with your CPA and tax preparation professionals for how to handle this in the future. I would recommend leveraging these elements in the discussion with your tax preparation professionals. Except don't be asking folks at like, an H&R block for advice... talk to real CPAs.


Lets look at my Patreon for example. My Patreon distributes upgraded training sheets, some damage modeling simulations, and host a separate discussion venue for mechanics, theorycrafting and advice on Gemstone. Technically speaking, under current tax law, this is a source of earned income, and subject to taxation. However, because of the value, Patreon does not issue 1099 forms until you surpass a certain monthly income bracket. Because of the non-tangible goods being issued, only a subset of the patreon revenue is subject to sales tax, which is paid by Patreon on my behalf.

All revenues have related expenses to the obtaining, holding, and distribution/disbursement of assets/services. However, since I was below the threshold, I don't go through itemization and oversight into all elements of my activities that are related. However, if they're forcing compliance of income, I guess it's time to evaluate how this looks as a sole priorietorship, properly 1099'ed business.

My subscriptions on X accounts with Simutronics are no longer a hobby. They are now a required expense in order to perform research, stay up to date on changes, and provide the value to my patrons to keep the revenue stream running. So my $X I pay to Simutronics is now a fundamental business expense, reducing that patreon income.
Since this is now more a small business, and not W-2 based income. While Trump got rid of the Home Office Expense for W-2 Salaried Employees, a 1099 proprietorship is eligible for home office deductions in accordance the longer standing regulations. I can apportion out the square footage of my house for the room that's dedicated to playing gemstone as a home office, and take a marginal expense of my mortgage, heating, and home maintenance bills. Cool, now I get a portion of my house paid for.

Now if we consider folks that are whaling, suddenly, any investment that they make into something like simucoins could be considered an investment, with the time/energy they utilize towards marketing, transfers, accounting, management, distribution, etc, as expenses that offset reported revenue from the sale of virtual goods.

Lastly, this actually creates a tax loophole. If Goat invests $1000 into Simucoins, and sells off all of the Bloodscrip books for $999. This reporting may enable him to recognize a loss of $1. However, if Goat is also getting 2% cash back on credit card... I don't personally ever remember seeing reporting on credit card incentives being reported ever since credit card interests were removed from being deductibles, which could enable him to recognize a loss on the sale, while seeing a profit. This could be a win-win for whales.

While yes, they may be uncovering 25% unreported revenue in the documentation the IRS is putting out, they're also forgetting the unreported expenses associated with those revenues.

[ClydeR]

Is your complaint that people who were cheating on their taxes won't be able to anymore? If you have taxable income, you are required by law to report it to the IRS, even if it is less than $600,regardless of whether or not a bank or Paypal sends a notice to the IRS.

[Whirlin]

Is your complaint that people who were cheating on their taxes won't be able to anymore? If you have taxable income, you are required by law to report it to the IRS, even if it is less than $600,regardless of whether or not a bank or Paypal sends a notice to the IRS.

While accurate, there's the concept of materiality in the accounting/taxation/audit world. Where is it worth worrying about small stuff when it doesn't impact the big picture. Specific to tax approach, where the price of enforcement/oversight to the anticipated gains out of the costs of that enforcement oversight. This is why companies like patreon, and I would assume onlyfans, fiver, and other gig-based internet services only push reporting over a certain revenue value. However, to the best of my knowledge, there's no specific value set forth on what those thresholds should be for such services. And these changes would establish that. However, I'm once again going to repeat that the thresholds proposed are far too low... but I also saw that they were meant as a starting point for negotiations, and were purposefully set incredibly low with the anticipation of resulting much much higher.

It's not worth engaging a $1000 audit over a 20% chance of recapturing $200 in back taxes. It's a waste of everyone's time in the process.

[Shaps]

Whirlin... that was a really good read. Interesting approach you came up with.

[Suppa Hobbit Mage]

It's not worth engaging a $1000 audit over a 20% chance of recapturing $200 in back taxes. It's a waste of everyone's time in the process.

I love the rationalization, Whirlin. Very logical and I'd suggest this would be true were you speaking of a for profit entity. The government is clearly not in that camp.

[Whirlin]

Spoke with a CPA friend of mine about it.

There's a line between Hobby and Small Business. These lines were further solidified via the Tax Cut and Jobs Act in 2017. However, while making them clear cut, they're also soooo much worse for us.

If you are receiving any money from a hobby, Trump via the TCJA removed Recognition of ANY expense related to revenue generated until 2025. If you play chess for fun and win the grand prize of $1000, even if you paid $5000 in lessons, all $1000 is taxable income, with no offsets. This has been law since 2017. So my previous posts were ONLY in regards to defining playing Gemstone for profit as a sole proprietor small business.

So prior to 2017, this was typically not enforced or considered because most folks would be able to offset hobby income with their hobby expenses to reduce those values to a 0 income. However, since Trump removed recognition of hobby expenses, those are now just endless unreported revenue streams that are unreported. This however, only hurts folks that have not established businesses/LLCs around their activities as 'small businesses' to carry the losses. Folks are misconstruing enforcement of laws as the attack whereas the original founding of the laws was the attack, and this is the necessary follow through to uphold the law.


There are a set 9 questions you should ask yourself to delineate a small business from a hobby:

1. Do you treat the activity like a business by maintaining accounting records?
2. Do you put in the time and effort appropriate to turn a profit?
3. Do you depend on the activity’s income for your livelihood?
4. Are the losses sustained in the activity beyond your control? Did the losses happen during the activity’s startup phase?
5. Have you changed your operations to try to achieve or improve profitability?
6. Do you or your advisors have the knowledge to run a successful business?
7. Have you profited from running similar businesses in the past?
8. Has the activity ever made a profit and, if so, how much?
9. Can you reasonably expect the activity to earn a profit from the appreciation of assets used in the activity?

Many of these are pretty subjective, but straight YES's point 100% to a valid small business. Any less is a little more ambiguous, but I think the only one that's a bit iffy for us Gemstone folks is Losses beyond our control. 8 is also a little iffy to answer YES to, unless you've declared that income in the past on previous returns, you could be opening yourself up to have previous years' reviews reviewed, you'll just need to do a little mental acrobatics to skirt it, or point to it being an immaterial amount of money, or observed others making profit/etc. Per a CPA's advice, "Read these questions before an audited, and know that they're going to ask you these questions with different wording, and that they're looking for YESs, and you'll be all set... but I've never had anyone audited on this in over a dozen years"

The CPA also pointed out that more than 2 years of straight losses raises a lot of red flags and could increase the likelihood of being audited if perpetually taking losses on small businesses. It is anticipated to be 'profitable' between 2-5 years. Other recommendations are adding some rigor by forming an LLC to buffer your own liability/etc. But, much more overhead.

One of my awesome patrons pointed out when we were discussing this that you can absolutely go invest $2k into a Lumnis brooch as an upfront expense, declare yourself a small business with anticipated profit in 2-5 years, and recognize the $2k losses to reduce income on your taxes. Especially if you're doing a 2-5 year plan, there ya go. You can't afford NOT to recognize this loss now.

Another concern I brought up the concern with quarterly tax payments that sole businesses are responsible for. And this is accurate, if your total witholdings do not cover your total taxes due. If you receive a refund, no problem. Even if you owe some money, he said it was typically insubstantial unless you're pushing additional taxes due in April over $10k.

I think the important thing is to protect your hobby income by establishing a small business by going through your characters and beginning to establish stronger oversight on your intangible assets to be able to recognize your expenses to offset your hobby income. Some whales I've spoken to have been doing this forever, so it's nothing new... but if you're a weekend warrior that's never really considered the possibility of getting tax advantageous XP Brooches and Simucoin block purchases, then you should consider investing in WhirlBooks, the new accounting infrastructure for Gemstone. Never before has it been easier to track revenues, expenses, and assets for your Gemstone Accounts with the option to directly feed in your INVDB data. Get more information at Patreon.com/LordWhirlin. But that's a joke... but also not a joke. I could absolutely make something if folks are interested and would like me to.

[Ardwen]

This like the 200th Death of Gemstone, if I had to hazard a guess, and I and the rest of us do, not a damn thing will change.