This morning’s New York Times has a brief piece on taxing income producing transactions of virtual worlds. The Times notes that a precedent does exist for taxing such activities: barter. Indeed, back in the 1970s the IRS implemented regulations on the taxation of barter (thus, today’s Form 1099-B).
Luckily for participants in the virtual worlds, it will probably take the IRS some time to determine what they’ll do (besides saying, “That’s so weird.”).