Say I play World of Warcraft and I kill a boss and get an item worth 10 gold. If the fair market value of that 10 gold is $5, do I have a taxable gain of $5? (As I understand it, the answer in the United States is "nobody knows".)
I would guess the IRS isn't interested in WoW gold. Although that might be a mistake on their part. Some people have made a lot of money off of Chinese sweatshops that play WoW and rake in the gold...
They are definitely interested in businesses that extract money at the end. For example, if I kill WoW bosses for money and sell those items on eBay, there's no question the IRS wants me to pay income tax on the dollars I get. I can deduct my basis in the item and if I really do play WoW for profit, I can deduct my reasonable business expenses too.
The question is -- what if I never pass through to dollars? What if I earn Bitcoins for consulting -- how is that materially different from getting an item for killing a boss on WoW? And if I buy hardware with my bitcoins, how is that materially different from buying an item at auction in WoW?
The problem is that if they're not taxable if they don't contact a real currency, then you really can bypass income and sales taxes. And if they are taxable even if they don't contact a real currency, then playing WoW could run up a tax bill even if you have no intent to ever cash out.