PrepTest 140, Section 4, Question 8

AnalogyDifficulty2 of 5
Passage 2Virtual economies and taxation
The questionFull text in your LawHub copy of PrepTest 140

Passage A is from a source published in(494 more words not shown)

Passage A(226 more words not shown)

Passage B(276 more words not shown)

Which one of the following(47 more words not shown)

Reading the passage

The two examples involve acquiring something valuable through effort. In A, players skin animals inside the game to obtain virtual pelts. In B, someone catches an actual fish. B uses that real-world activity to explain how virtual loot should be treated.

What we’re looking for

Keep the example and the thing it explains separate. B isn't saying that fishing happens in the game; it is comparing game activity with an activity outside it.

Working the answers

  • A

    Both activities can generate wealth. A virtual pelt can have a sale value, and so can a real fish. The distinction is not valuable versus worthless.

  • B
    Correct

    The virtual animal-skinning occurs in the online game; the fish comes from the real ocean. B's analogy concerns property acquired through effort: obtaining it should be distinguished from later selling it. The real example helps explain the proposed treatment of the virtual one.

  • C

    B doesn't draw this tax distinction between producing virtual pelts and acquiring real fish. Its comparison puts the two activities on the same side of the acquisition-versus-sale distinction. The ordinary acquisition of loot should not itself be taxed like winning a prize.

  • D

    This reverses C, but the same problem remains. B doesn't recommend taxing the acquisition of the fish while exempting the acquisition of the pelt. The fish is described as taxed only upon sale. Don't confuse acquiring property with selling it.

  • E

    Only the first example is an activity performed by game players within the virtual world. The fish is a real-world comparison, so both cannot be examples of in-game wealth creation.

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