Are virtual assets taxable? (Article)

CNET News.com reports: "...virtual-world community buzzing over a new question: Should online game players' assets--the weapons, characters, clothing and such--they've accumulated but not yet sold for real-world cash be taxable by the IRS?..."

I was kind of shocked to see this article, I didn't know how to deal with the fact that virtual assets can now be taxable. I believe in everyone paying his or her fair share, but part of me wants to think this tax is getting excessive when it comes to virtual items. Most of us are used to paying sales tax on the items we buy (unless you live in a state that doesn't have it), but having to pay a tax on an item that only exists as lines of code a server somewhere is a difficult concept for me to deal with.

Whether the items are real or virtual, real money is being used to pay for these virtual items. So taxing these items makes sense, but this doesn't mean that I have to agree with it.