Excellent 1 hour documentary by PBS. Espouses many simple living, ERE, ERE Community, self-reliance,worker co-ops,sustainability principles.
The Hour Exchange program in Portland, ME was very interesting: A program where people exchange 1 hour of work/services for a 1 hour credit of work/services. The journalist donated 1 hour weatherstripping a woman's basement and in exchange chose to receive a 1 hour sail on a man's boat. No currency exchanged whatsoever and not taxable by the IRS.
Another interesting story was of a man in Washington state that carries his portable house on the back of his bike. Way more extreme than most of us would prefer to live but very clever. Tumbleweed & other small houses were discussed too.
The program even discussed future retirement programs where people could self-direct investments in local community businesses etc.
Fixing The Future/PBS documentary(15 posts)
That kind of bartering IS taxable by the IRS.
As far as I understand, the only thing that's not taxable is bartering similar things, e.g. my DVD for your DVD or my mowing your lawn in exchange for you mowing my lawn. I couldn't find this exception on the irs site, so this may have changed.
In the documentary, the founder of the time exchange program states that the IRS considers it a non-commercial transaction and thus non-taxable. Seems like somehow they frame it in terms of donating time and it also seems to be limited to 1 hour increments. Perhaps this keeps it from being commercial and taxable?
I think it is on shaky ground with the IRS if there's a central exchange for the bartering/time-swap. Personally, I'd be very wary.
I went to their website to learn more:
It is not considered bartering. This is cut and pasted from the FAQ section:
"So you are like barter? No. Barter is trading, based on cash value, between two people. We are a non-profit 501c3 service exchange organization. Our currency is based on time, with no relation to market value and it is not a direct trade between two people. If an Hour Exchange member gives an hour of their time they can receive an hour of anyone else's time within the Hour Exchange member community. And unlike barter the IRS has determined that exchanging time is tax free!"
Still think they're on shaky ground. From the IRS page:
"Bartering occurs when you exchange goods or services without exchanging money. An example of bartering is a plumber doing repair work for a dentist in exchange for dental services. The fair market value of goods and services received in exchange for goods or services you provide must be included in income in the year received.
Generally, you report this income on Form 1040, Schedule C (PDF), Profit or Loss from Business. If you failed to report this income, correct your return by filing a Form 1040X. Refer to Topic 308 for Amended Return information.
A barter exchange or barter club is any person or organization with members or clients that contract with each other (or with the barter exchange) to jointly trade or barter property or services. The term does not include arrangements that provide solely for the informal exchange of similar services on a noncommercial basis."
Note that the IRS doesn't care whether the valuation is on a cash or time basis. You are definitely under the IRS rules if the work you perform in the hour is your profession... that _might_ be where there is wiggle room for HourExchange, but the explanation HourExchange gives doesn't hold water (in my non-professional eyes).
Hmm, the Portland organization has been doing this since 1997...
Perhaps the loophole resides in this sentence?
'The term does not include arrangements that provide solely for the informal exchange of similar services on a noncommercial basis.'
Of course, how then do they define 'informal' and 'noncommercial?'
Of course, if members haven't been taxed thus far that's not to say they won't be at some point in the near future, deficits being what they are and all all..
I was at work when I saw this and showed it to our accountant. She thought it was probably taxable no matter what the website said. She also noted it depended on your occupation. If you normally charged for the service you were providing it might be taxable. If you were an accountant, but you offered to paint someone's house, it might not be taxable because you normally wouldn't be charging for that service.
That makes sense. It seems like many of the time exchanges involve things that aren't necessarily occupational.
In any event, the documentary was insightful and it was refreshing to find people that were looking for alternative solutions to economic and financial issues.
Interesting documentary. Thanks for posting.
I consider myself more of a socialist, but find capitalist co-operative communities and initiatives fascinating.
> That kind of bartering IS taxable by the IRS. As far
> as I understand, the only thing that's not taxable is
> bartering similar things
That is freakishly bad for the Government to interfere so deeply into such a deeply ingrained Human social transaction!
But hey, what would I know.... I am just an outsider to the US system.
I am sure there are very good reasons for the law. But somehow I remembered this adage first: "Road to hell is paved with good intentions"
P.S: This Tax on barter somehow inexplicably reminded me of this recent chestnut about Corporations being (NOT) people
P.P.S: Sorry, back to topic.
So if you weatherstrip my house and I fix your teeth, then we gotta do a 1099? I don't think so Tim.
I got the entire gist of the linked articles, and yes I am a law abiding individual, but let's get real here. Nobody is going to report this stuff. The main way the IRS will raise an eyebrow on bartering is with these people who make a store front, and put up a sign saying "Bartering R US". At some point, they might get a look over. There are just too many of these around to mess with. The IRS might choke a few folks to set an example for everyone else, but I don't think it is possible to police much of it. It is different if you are officially "in business" and the exchange of your business is "Bartering" instead of money. Almost any other kind of thing is going to be invisible to any but the involved parties. The "swift" computer programs can easily locate people with business licenses that file no income tax, be it corporation or individual. The whole thing of importance to the IRS is (a) spanking someone to set an example for others, and (b) is it a good use of their time to go after them?
I'm with Spence on this one. This country has gotten to the point to where it has been sabotaged by the threat of punishment, whether by government agencies or personal lawsuits. Unless you are just foolhardy with it, there is no way to track or document the whole process. And I do feel our government already gets a fair share of my income, and would have no problem trading work with others without the IRS in the know.
The only problem I have with the system is that each hour is considered equal regardless of the service provided. Does this mesh with reality? I rake your leaves and you replace the timing belt on my car? It kind of reminds me of our local freecycle; there's a whole lotta requests and almost no give aways. Hate to be cynical here but human behaviour is what it is. I love the concept of the program however.
Maybe it's not taxable because the organization is non-profit?
You start to negotiate how many hours some service will earn you, and you just made another currency. That's a hard philosophical task. Either you negotiate and then you have the same capitalism, or you do not negotiate and then you have... communism? :-)
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