Design the game so playing won't generate hundreds of moves for tax declaration

[atomic nimbus]

(Posted on behalf of @spice burrow )

Illuvium legal staff should choose 4 or 5 countries to study tax declaration of moves made while playing the game and design Illuvium so it doesn't become a nightmare when players have to do their tax declaration.

If 5% of game revenue is distributed among land plots daily, that's 365 incomes per year while if distributed weekly are 52. Best option to do it monthly to declare only 12 incomes per year.

Every day a land owner sells fuel at the market will have to declare 2 movements, one for the production of fuel tokens and the other for exchange fuel tokens for eth. That x3 kind of fuels will be 6 movements every time. Create an additional storage where to send up to 30 000 digital fuel that cannot be returned to the plot and can only be converted to crypto fuel tokens to sell them at the marketplace. With more storage, developed lands won't have to be selling their fuels every several days.

If land owners have to use the crypto market to send fuel tokens from their zero to overworld account to spend there, that's 3 fuel token productions and 3 different crypto tokens spent each time. Instead if fuel is sent and spent directly in digital with no conversions then probably are no moves to declare.

Legal staff should study if illuvials should be nfts the moment they are catched in overworld. If so, every time a player catch illuvials may have to declare every one of them at market price and later when sell them for eth declare the price difference. Only if that's the case, would be better catching them digital and have a button to later convert them to nfts without fees. If you convert many to nft the same day and sell them in bulk, the whole pack may be 1 move. Speed up the update for bulk sales at illuvidex.

Crypto system of the game should store info about the existence and stats of all illuvials catched, wallet and status (digital or nft). If playing generates much less movs to declare then more people may be interested in joining and keep playing Illuvium.

[golden nova]

boy what a big headache crypto gaming is going to be with taxes

[thick willow]

This is very important. Ownership is great, but Web3 will never gather the masses until all this kind of friction is gone. The game should keep a log where you have a list of your profit and loss for your trades, with a command to generate your TOTAL P/L for the year. We could then declare a single gain or loss in a tax report.

[sick island]

Pass on spending our budget trying to solve something this complicated

[thick willow]

Maybe it can be implemented later on, but honestly you don't get millions of players with hurdles like having to book-keep every single action you do in the game in a spreadsheet

[timber sail]

Daily distribution is extremely unlikely (for Zero in particular), so I wouldn't stress too much about that. A common sense way to handle it is to have a threshold at which a distribution occurs, or to simply ensure landowners receive their 5% in other ways, like through Fuel as was originally intended.

You can already see everything your wallet has done on IMX via Immutascan, so it shouldn't be too much of a hassle to find minting events etc.

While I agree that minimizing transactions is a relatively reasonable thing to do, one thing that isn't constant is tax law regarding crypto and NFTs across countries. Tailoring a system to one tax system will inevitably hurt people under another.

The ability to view and print transaction history in an accessible format seems like the answer, if any.

[thick willow]

By the way Pelican, i am pretty sure that the market value of a particular Illuvial when you capture it is irrelevant. You get a new NFT for free so therefore your cost basis is $0. Then if you sell it, you can book the profit as a capital gain.

[timber sail]

Just for reference, this is what we have access to now via Immutascan. You can view your txns and export as csv. It's not pretty, but it's very usable. The only issue with it at all is that it gets slow to load when you have 2k+ transactions or so.

This is just a snippet from one of my wallets' txn history.

[thick willow]

Usable, but pretty much a nightmare 😂

[timber sail]

I mean, it's a UI away from being literally everything you need to do taxes with easily.

Txn dates, amounts, currencies, and USD value at the time of the txns

[thick willow]

fair enough, i'm being dramatic. i just hate taxes

[timber sail]

Amen

[thick willow]

The most elegant and streamlined way would be to have all assets and currencies stuck in-game within the ecoystem, then all you would have to know is how much dollars did you put in and how much dollar did you cash out.

[sick island]

Not how taxes work, the exact transactions matter

[stable stump]

This looks like a prime use case for a third party tax tool, not something the team should redesign the game around.

[compact agate]

Tax transactions for Beyond are a bit of a nightmare already. Land could end up 100 times worse if timing isn’t thought about.

[atomic nimbus]

I did not write any of this idea.

I suspect how taxes work in different jurisdictions is different. But I’m not tax expert so I won’t comment on what is or is not taxable when or how.

But I will second what blickter already shared. Everything is on chain anyways. So illuvium doesn’t really need to do anything. More transactions does not mean more difficult to report. It just means more transactions. What we really need is for IMX to make a “partnership” with a crypto tax company like Koinly so it can read all the transactions and add the data to the tax form automatically. Blockchain data is already out there, even for ImmutableX transactions. It just needs to be a little easier to use for tax purposes.

[thick willow]

I was referring to this part: "every time a player catch illuvials may have to declare every one of them at market price and later when sell them for eth declare the price difference"

[slender tinsel]

do push rewards, make people take their fuel to a facility that mints it so they choose when to take the taxable income

[fluid nebula]

In general I would say, we should not compromise our game designs to make filing taxes easier. Tax authorities should make it easier for us und not the other way around.

If I am correct, Austrian tax authority doesn't tax individual crypto transactions, only when you convert into fiat. And I believe Japan is going the same route. I wish it was the same in Germany.

With all those crypto/NFT innovations (lending, fractionalization etc.) it will become a nightmare for tax authorities to create rules and check and for us to report.

But since we are talking about taxes here, can someone provide me with some advice in regards to fusing Illuvials or bonding Illuvitars?

Multiple NFTs are burned and we get a new one.

I personally don't know how to value the NFTs in such a transaction and I doubt my tax authority has any clue either.

Cointracker seems to treat burned NFTs as losses (basically sold for zero), but I don't even see a way to import Immutascan NFT IDs for Cointracker to keep track of NFTs.

Obviously this depends on our tax authority, but how do you guys handle it?

[wheat canyon]

Interesting topic, Australian Govt does tax every crypto event, believe me I know 😉

[atomic nimbus]

I’m a degen. I simply don’t report anything on imx. But I don’t make a lot of sales on imx either. My imx self is basically a different entity

Don’t be like me

[blissful rune]

I don't think Illuvium labs should be burdened by this. The free market will come up with solutions to this, as long ILL make sure game movements can be exported.

[fluid nebula]

The only thing I am worried about is the web2 players we want to attract.

Even if we make it really easy for them to create a wallet and pay with fiat, the fact that converting ETH into fuel makes it a tax event in many jurisdictions, could be a show stopper for some.

[frank gull]

Your government doesn't have the right to charge you taxes on crypto, don't pay. There I solved the problem

[thick willow]

Exactly, gotta make it as easy as possible on every aspect. Otherwise web3 gaming will never attract millions of players. But then again some folks that are going to play are not even in age of working yet... So for them the concept of tracking stuff for taxes is absurd. Not sure what to think of all this

[meager shore]

This has definitely been on my mind too. It's low key one of my biggest concerns for the sector. How can we ever expect regular gamers to join in once they're aware they're going to have to start filing their own taxes without any consideration from the games triggering the taxable events.

Koinly have recently added support for immutable, although some things I've noticed don't reflect correctly on immutascan which is probably what they have integrated. So I would suggest that the blockchain team work with immutable to ensure that data is fully and accurately reported on immutascan as a minimum.

[meager shore]

Until now, because koinly didn't support immutable, and also due to relatively insignificant volume, I also haven't been reporting my immutable activity lol. That is changing this year I hope. But yes, don't be like us

[atomic nimbus]

Koinly does NOW support imx integration.

I’m not sure it will make it into my reports this year… don’t be like me

[wheat canyon]

FFS all my IMX stuff was off the books, I don't actually want it on the books now lol, already did the financial gymnastics to explain the gaps to the auditor, don't want no mystery assets popping up now 🤣