Dragon Slayers or Tax Evaders?

Julian Dibbell has a piece on the LegalAffairs site exploring the possibility that MMOG transactions could be taxed. From the article: "June 2003. I set myself the following challenge, posting it on my web log for the world to see: 'On April 15, 2004, I will truthfully report to the IRS that my primary source of income is the sale of imaginary goods--and that I earn more from it, on a monthly basis, than I have ever earned as a professional writer.' In the course of this project, I made a total of $11,000 selling on eBay the items I won playing a game called Ultima Online, $3,900 of which was in the final, most profitable month. I reported my profit to the IRS, and I paid the requisite taxes. But after I did so, a troublesome set of questions continued to nag at me--for which even IRS publication 525, entitled 'Taxable and Nontaxable Income,' couldn't provide answers."