In an article on CNNMoney, Grace Wong gives an update on the tax implications of virtual transactions. While it is settled that any exchange which results in profits for US dollars can be taxable, the whole area become murkier when the question of how to treat virtual exchanges that do not directly bring any US dollars to the table. Bartering is taxable in the real world --> should it be in virtual worlds?
Virtual Taxes: An Inevitability?
Edward Castronova sees this taxation as unavoidable within the next ten years, but probably not going to happen in the next three. It seems that there are so many problems with policing: I do not see how it can work unless something like SOE's Station Exchange in Everquest is implemented so that all transactions can be accounted for.