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I'm trying to make sure I understand this correctly. In the original (Advanced D&D) Dungeon Master's Handbook starting on page 120 outlines various magic items. In the value tables there is Experience Point Value and G.P. Sale Value.

On Page 20 before the first such table it reads:

The suggested experience point (x.p.) values are for characters who keep the items. Gold piece sale values are the usual sums which characters will be paid for magic items, and if so sold, the x.p. award should be based on the selling price of the items, not the x.p. value. Also remember that a character is assumed to retain an item, thus getting the low x.p. value for it, if he or she sells it to another player character.

To give one example a basic healing potion it states has an Experience Point Value of 200 but a G.P. Sale Value of 400.

Does that mean if I find a Healing Potion I can keep it and earn 200xp (split among the group). Or I can sell it and thus earn 400gold and 400xp?

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Does that mean if I find a Healing Potion I can keep it and earn 200xp (split among the group). Or I can sell it and thus earn 400gold and 400xp?

Yes, assuming that you actually sold it for 400gp - you could get more or less depending on your negotiating skills.

Also, in AD&D XP for monsters is divided among the party, XP for treasure belongs to the person who keeps the treasure/money from the sale.

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Page 85 provides the additional information about experience points for the sale of magic items:

All items (including magic) or creatures sold for gold pieces prior to the awarding of experience points for an adventure must be considered as treasure taken, and the gold pieces received from the sale add to the total treasure taken. (Those magic items sold gain only a relatively small amount of experience points, for their value is in their usage.)

So the answer is, yes, you either retain it and earn its XP value or sell it and earn XP from the proceeds. In both cases the item is considered as treasure taken from the adventure and therefor the experience is divided amongst the surviving characters accordingly.

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