I've looked over the FAQ and threads about virtual currency, but I don't know if they apply for me. I make money from the virtual world Second Life.
I sell products in Second Life, and convert that virtual currency to dollars. There is some confusion about how I should report this properly. I convert from virtual currency to dollars and withdraw about once a month.
Both their documentation and Paypal documentation says I will get a 1099 if I go over both a $20K/200 transaction limit. But, since I only withdraw about 10 times a year, I never break the transaction limit even though I have broken the $20K limit.
In the virtual world, I may be selling thousands of virtual items, but in the real world, it only counts the transfers to PayPal.
In the past, i have reported it as hobby income, because it was not my primary source of income.
How should I report it if I don't get a 1099K and it is my primary income now? Since I am otherwise unemployed, is it still hobby income?
