Its insane that people are willing to mix real money with games, but there can be alot of money in doing it:
http://en.wikipedia.org/wiki/Anshe_Chung
... in case you haven't heard of her.

LOL flying penis in Second Life.
Still, seems a lot for what is basically an intangible asset.

What would you call a security in any publicly traded company? It's basically intangible, yet people make a ton of money from trading them back and forth.
Before people call him insane, I'd suggest you look at how much people have made previously off of items that have been auctioned off in the game. It'd be better to not think of it as a game like WoW but more like a virtual world like second life, or from the book "Snow Crash".

I play Entropia/Planet Calypso purely for the Sci-Fi enviroment. Some months I make a few dollars extra, some I'm a few under, but my initial $30 in is holding up for so long it's cost me a total of $1.25 a month for every month I played.
In my time I have seen guys running around with guns worth $1000 US real life money and acting like it was nothing to get, I seen someone dump $100 of mining probes with only $15 or so return and act like it was nothing, and I can understand how when properly played you can get returns on an investment like this. Heck, the owner of Club Neverdie keeps himself and his son alive almost purely on his in-game revenue alone according to the documentary I saw on it.
As for writing that off on taxes, imagine explaining that proposition of buying virtual land in attempt to get your bank to give you a loan on such a bid.
EDIT: Forgot to mention that I still think this purchase is partially insane. Unless you have millions of dollars to play with anyway, then this might be an interesting business foray but I can just not imagine myself doing this when the same money gets me tons of land and a nice house.

how is the gameplay? you are practically playing for free so how is the game compared to other mmorpg especially Anarchy Online.
I wanted to try it but mmo are not for me.

Well it's hard to explain. Anarchy online is a joke compared to Entropia and I know this because I played both. As for explaining how the game is prepare yourself for a long rundown.
If you look at auctions at guns and read their descriptions like I do I enjoy reading the description and stories for guns and their technologies. It is a developed sci-fi universe that gets richer every year. But then it feels hollow because there is no direct story. Just the generic "colonists are dropped on the planet to fend for themselves, some do good many don't" kind of thing.
Actual gameplay is semi-dull to semi-exciting, but it's not stellar. I chat with people I know, and you can easily obtain clothes and armor for cheap to change appearance and it can become a very cool 3d chatroom. Also the natural beauty of the world on my quad-core pc is visually stunning and I sometimes just go exploring (which is free, dying is free and you don't lose a thing) and the world is so huge, going between cities is 20 minutes or more of a run. Sometimes hours. So much to look at and explore that alone is awesome to me. I have a cheap rifle and hunt low level animals and gain minimal profit, and get entertainment having hunting parties.
Me or my cousin would 'sponsor' a hunt, where the person pays for the guns and ammo, then when everyone kills stuff they give all the loot, guns and leftover ammo to the sponsor. If profit was made it will be split evenly between everyone, and usually with me guiding the hunt as I know what to look for in profitable loots we gain 75% of the time.
The one thing I warn you, don't put much in. If you do it becomes a suction sort of cycle I heard, where you gotta keep going to keep developing your character as in a normal RPG. Don't worry about developing a character past level 400 on many skills (they go up to 8000 for some, I got 2000 rifle skill after years of playing) because past that you will need in-game rifles worth $20-$100 to use the skill to full potential. Also, when you lose out many get frustrated because they see money going away. I consider my money as payment for renting the servers ala EVE online and WoW charging $15 a month, well it's cheaper to play on Entropia even if you lose money. Do not get frustrated, play the game and enjoy it as-is.
Also it is free to play. Download for free and play for free. You can 'sweat' creatures and taht gets you about 70 cents an hour, some people do that but I can't. I can work for mimum wage for 2 hours and be set for a few months. I don't want to waste my time sweating because I don't have much anymore. But, that aside, download the game and contact me I can sponsor a hunt with you maybe or give you some pointers. Heck there is plenty of fun to be had on the free parts of the game alone. To get a hold of me try XFire and run it with the game as it makes chatting much easier, you can't type in someone's name in Entropia to chat with them privately, you have to find them in the game and click on them. My XFire ID is TB87670, aka T-Bone Biggins. Same message to anyone wanting to try Entropia, I can give pointers and it's free.

Somewhere out there, PT Barnum is smiling....
Also, I smell a business opportunity in the making, let's call it "seperating rich suckers from their money". Any takers?

Count me in!

LOFL!

That explains things good enough for me. Seems like it IS possible to make money off of it, but you gotta be pretty dedicated to doing so, and as the old saying goes, it takes money to make money. Not worth chancing it to me though. All in all I'm sure a person can make more money doing a real job. Still though, I may give the free part of the game a try sometime. I like exploring large worlds when it doesn't cost me a fortune in gas money. Ha. It's just rough for me to get into MMO games. I lost interest in the D&D online when it became free to play, via a cash shop of course, in less than a week. Yet I can still install Baldur's Gate TOTSC and be hooked for well over a month. I'm not sure why. Thanks again for taking time to explain things a bit.

Well the key is not you can make money off it, that is highly unlikely without major initial investment (to get crafting skills up for example) but you can play smart enough to have fun while maximizing the amount of time you can play for a single payment. Hence I sponsor hunts and guide them, get enough profit I can keep playing a fun game for a long time. It's cheaper than other MMORPGs and the free part is awesome, because you can do anything. Stuff just needs money. Walking around and dying is free, talking is free. Hunting you need a 40 cent gun and ammo. Or a powerfist/dagger/power sword. For crafting, well, money dump until you spend hundreds on skills. Don't know how to better explain it. Hook up with me in-game and via XFire and I can get you a hunt or find someone who can do the same to try it out better.