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article about barter

Discussion in 'Financial Cents' started by eeyore, Mar 3, 2009.

  1. eeyore

    eeyore Monkey++

    Cashless Improvisation
    As the old cliche has it, cash is king. But what happens when there's not enough of it to go around? What do people do when jobs are scarce or the mechanisms that are designed to keep liquidity flowing no longer function as intended? People improvise, of course. And that is just what some are apparently doing now, if the following Associated Press report, "Bartering Makes a Comeback for Those Short on Cash," is anything to go by.
    Tired of her pink bathroom countertops but short on cash for a remodel, Rachel Alemany decided to get the work done the old-fashioned way: through bartering.
    Alemany has experience putting down flooring, so she and her husband traded flooring work with a neighbor who has tiling experience.
    "It was that easy," said Alemany, a special education teacher from Pittsfield, Mass. She got the idea from her mother-in-law, who exchanged renovations for room and board, and she might try it again: "I have other rooms in my house that need work."
    Bartering - the trading of goods or services without using cash - is making a comeback in a troubled economy. It can be as simple as trading baby-sitting with another family, or as complex as an exchange with strangers facilitated by one of the several Web sites that have sprung up to connect barterers.
    Bartering ads on Craigslist have increased about 100 percent since last year, said Susan MacTavish Best, a spokeswoman for the online classified advertising service. Traffic is also up at local organizations like the Midwest Barter Exchange, a Kalamazoo, Mich.-based outfit that acts as a go-between for about 1,000 business clients.
    "Before, we were out beating the bushes trying to get people to join, and now they're calling us," said Lance Dorsey, a customer service representative for the exchange.
    Boise beautician Heather Wood has traded haircuts and pedicures for years of daycare, kids' clothes, a paint job for her car, an oil change, a set of professional portraits for her family and dental cleaning.
    "It's fun, and it builds a whole different kind of a relationship," said Wood, who has five children. "They're getting what they want and I'm getting what I want. I would much rather do that than make cash most of the time."
    These days, making cash isn't always an option, so many have decided it is worth the effort to trade, say, an outgrown kid's bike for a neighbor's lawnmower, or a massage for some gardening supplies.
    "I'm finding it a little bit difficult to sell anything right now," said Jeremy Kildow of Nampa, who chose bartering when he decided to get rid of a $1,000 camera, a kayak, a stainless steel kitchen range and other items.
    Kildow put his stuff on the Boise-area Craigslist site under "barter" and suggested horses, pack mules, a four-wheel-drive truck, a computer or a flat-screen TV in exchange. So far, he's had an offer of a truck, some computers, and a wedding ring.
    Bartering can be less expensive than buying because there are few overhead costs for rent or staff. However, not all costs are eliminated. The IRS considers barter dollars as identical to real currency for tax reporting, and barterers must obtain a special form, the 1099-B.
    But bartering can also be more fun than laying down cash.
    "The human element and the relationship between buyers and sellers becomes more important when we get involved in bartering transactions," said Gary Forman, president of a company called Dollar Stretcher that publishes methods for saving money. "I'm not sure we don't have some longing for that."
    The quirky, independent aspect of bartering is what Vermont resident Matthew Stewart likes. He got his Honda motorcycle in a trade with a stranger through Craigslist. Stewart gave up a wood-burning cook stove he'd acquired but didn't need.
    "If somebody wants something that you've got, there's probably a good chance they've got something you want that they don't want," said Stewart. "With bartering you end up with something interesting."
    Some things are easier to barter than others. While carpenters, massage therapists and hair stylists have a set price for their work and can easily trade it locally, other professionals, such as physicians who work in hospitals, can be constrained by the institutions that employ them.
    Nevertheless, Forman estimates that 60 percent of the companies on the New York Stock Exchange participate in some kind of bartering.
    Of course, there are no signs that bartering will ever catch up with cash. Professor Andrew Whinston at the University of Texas at Austin, who has written about bartering, said the Internet has made bartering easier, just as eBay has made it easier to sell things that used to sit in the attic for years.
    He doesn't see bartering as something that will "take over the world," but said nobody knows for sure what's going to happen next with the markets that rely on credit and currency.
    "Maybe if the economy goes totally down the drain, we'll all be bartering," said Whinston. "I'll be selling copies of my articles in academic journals for a meal at a restaurant."

  2. ghrit

    ghrit Ambulatory anachronism Administrator Founding Member

    WTF,O? You get taxed on the income when you bought the item in the first place, and taxed again when you take in something someone else paid tax in an equal value trade? I can't get my mind around that concept. How is it income when all that happens is swapping holders of the "asset"?

  3. eeyore

    eeyore Monkey++

    I guess it is kind of like getting a tax return and then having to pay tax on the money the second time. When i filled out my taxes this year i had to add my return from last year on my state taxes. I guess they looked at it as income.

    When i barter i fillout no forms

    If it moves or lays there the government will try to figure out a way to tax it.

    They will be after the internet full steam soon. To pay for some of this trillions of dollars they have printed in the last comple of years.
  4. Tracy

    Tracy Insatiably Curious Moderator Founding Member

    From IRS information:

    Exceptions. Barter exchanges are not required to file Form <nobr>1099-B for:</nobr>
    <nobr>1. Exchanges through a barter exchange having fewer than 100 transactions during the year.</nobr>
    <nobr>2. Exempt foreign persons as defined in Regulations section 1.6045-1(g)(1).</nobr>
    <nobr>3. Exchanges involving property or services with a fair market value of less than $1.00</nobr>
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