Step 6Upload into Second Life
iImage Information

From the file menu in Second Life, choose "Upload Image." Select the taga file you just created. It should show a preview version of the texture with alpha transparency. All transparent pixels will show a cherboard backdrop instead. If it suits you, pay $10 Lindens and upload the texture. Once uploaded the texture's transparency will not show up, but that's okay. It's just an SL "feature." As long as your transparency shows up in the preview, it will appear when you apply it in world.