Heidi Bond asks a puzzling question about tax law and online games in A Question About Tax:

Now it turns out that the Kingdom of Loathing has a well-developed economy. I could sell my Talisman of Baio to another player in the Mall of Loathing for close to a hundred million meat. It also turns out that the Kingdom of Loathing has an economy which is intimately connected with our real economy, so I could sell the Talisman on eBay for cash.

If I sold the Baio on eBay, I’d obviously have to pay taxes on the sale. And if I found a valuable diamond ring while walking through the woods, I’d have to pay taxes on my windfall. So is finding the Baio itself, in the game, a realization event? If I choose to keep the incredibly-useful Baio for myself, without selling it, do I have to pay taxes on the find? What about if I sell the Baio for meat in the Mall of Loathing? Is that a realization event?

The answer is not that we can’t value the Baio; there’s a pretty robust in-game player economy, and regular out-of-game meat sales on eBay. An in-game Baio is worth 98 million meat, and meat goes for about 700K per dollar, so Baios are probably worth about $140. This isn’t a difficult valuation problem (and even if it were, I don’t think that would matter).