The thinking is that in-game trades of virtual items like swords are not taxable events, but in-game sales of items for virtual currency are taxable events.

FORBES: Taxing Virtual Worlds

The tax code is so convoluted that many people struggle through the ins and outs on which form to report income, which schedules to deduct expenses or even which items of income are taxable and which expenses are deductible.

FORBES: Pro Athlete Tax Returns Illustrate Complexities of U.S. Tax Code