The weekly newsletter for everyone interested in barter--the world's most versatile business tool!
January 4, 2000
In this week's report. . .
Report From BarterNews
All Barter Deposits Are Not Taxable Income
Every January, as required by law under TEFRA, all of the approximately 500 organized trade exchanges in the U.S. provide the IRS with statements showing the total amount of barter credits deposited into each and every member's account during the previous calendar year. However, some of these barter deposits may not be taxable income.
(Your trade exchange also provides this information to you in the form of a 1099B, "Proceeds from Broker and Barter Transactions.")
Here is a look at another one of the five kinds of barter deposits which are sometimes improperly taxed. You may want to file this important information and show it to your own tax advisor to determine how to report your trade dollar income.
Borrowed Trade Credits
There may be a situation where you need to borrow trade dollars with an agreement to repay the loan, perhaps with either cash or barter credits as interest.
The borrowed credits that you deposit into your account should not be taxed, any more than cash that you borrow from your bank or credit union is taxable.
Although borrowed trade credits are not taxable, the IRS will expect you to pay a tax on (what appears as) all deposits...because they don't realize certain credits fall into the non-taxable category.
The solution to avoiding taxation on non-taxable trade dollars is to insert, and number, a table at the back of your income tax return titled, "Other Income Barter, Form 1040 Line 21."
The table should show the amount of barter credits on your 1099B, less any barter credits received as a gift, less any credits received as loan repayments, less any credits borrowed from the trade exchange or a member, less any credits purchased for cash, and less any credits transferred from one account to another.
Subtract all these minuses from the amount on the 1099B and write that number on Line 21 of Form 1040, with a note to see attached table.
(The information given here is educational, and you should consult your own tax advisor to determine how to report barter credit income.)
$350 Billion Product Overstock & Surplus Inventory
Manufacturers, wholesalers, direct marketers, and retailers have used corporate barter companies to move a portion of their surpluses, which last year reached the staggering $350 billion figure, according to market research firm Winterberry Group of New York.
It's estimated that product overstock and surplus inventory will total $445 billion by 2002. And the Internet surplus-inventory sales market is poised to boom as marketers discover what an efficient liquidation channel, it can be. In 1999 the e-surplus market was $7.8 billion, but by 2002 its estimated to reach $93.3 billion.
A new company on the scene, www.bargainbid.com, expects to take advantage of this huge market by soliciting bids on goods it is reselling, especially excess inventories. They hope to get "more respect" with Rodney Dangerfield as their national spokesman.
ZiaSun Sells Newcomer Asia4Sale Web Site for $5 Million
ZiaSun Technologies (OTCBB: ZSUN) an Internet holding company focused on e-commerce and specialized online support services within North America, Asia, and other international markets, has sold its wholly-owned Asia4Sale Ltd. subsidiary for $5 million in cash to a private Asian company.
ZiaSun will retain a 30% ownership in the new Asia4Sale entity. The web site was launched on September 15, 1999 as a unique e-commerce facility catering to the global market with industrial auctions, business barter, home shopping, and the opportunity for anyone to open an Asian-specialized online retail store for free.
Showcasing over 5,000 products from more than 100 Asian manufacturers, the merchandise encompasses a wide spectrum ranging from electronics and CDs to sporting goods and Chinese arts and crafts, at prices from $25 to $1,000.
The site, www.Asia4Sale.com, enables shoppers to order direct from the manufacturer with home delivery anywhere in the world. Asia4Sale processes MasterCard and Visa credit-card payments in a variety of major currencies.
Bartercard Hong Kong Founder & Managing Director Moves to China.com
Rudy Chan, the founder and managing director of Bartercard Trade Exchange Hong Kong, has moved on to become the director of e-commerce for the network of china.com. Chan will have the responsibility for the network's overall e-commerce vision, strategy, and operations. The company has over 800 employees in 21 offices across 10 Asian markets.
Prior to joining Bartercard, Chan was at Time, Inc., for eight years and oversaw all of the group's businesses throughout Asia, including TIME, Asiaweek, and Fortune magazines.
Here And There...
Coming soon. . .
We welcome your comments, questions, and observations.
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