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October 19, 1999

In this week's report. . .

  • The monetization of trade credits
  • Web based freight exchange created
  • All barter is not taxable
  • Mainstream news about barter
  • Here and there
  • Follow-ups on previous reports


New Program Offers Corporate America
Additional Liquidity With Trade Credits

First International Bank, headquartered in Hartford (CT), has entered into a strategic alliance with the world's largest corporate barter company, Active International located in Pearl River (NY). Active has offices in 12 countries, and counts many of the world's largest manufacturers as clients.

As a result of the alliance, First International Bank will allow many of Active's clients to monetize their trade credits, prior to utilizing them to acquire media, goods and services.

Alan Elkin, CEO of Active, explained, "Our track record for performance in trade credit usage has given First International Bank the confidence to bring liquidity to the transaction." Elkin says under this program, Active may also issue trade credits, which can be monetized, to match unusable trade credits from other trading companies.

Brett Silvers, chairman and CEO of First International Bank, called the alliance noteworthy in that it brings together two companies known for their focus on providing financial services to manufacturing and distribution companies.

"We are both experienced in utilizing creative solutions to solve common problems in industry, such as excess capacity and inventory," Silvers declared. "Our methods for monetizing trade credits for qualifying companies will be a driving force for success and change in the $9 billion barter industry."

First International Bank specializes in Financing Manufacturers Worldwide?. Founded in 1955, it is the nation's largest combined user of loan guarantee programs made available by the Export-Import Bank of the U.S., the U.S. Small Business Administration, and the U.S. Department of Agriculture.

The bank has offices in 11 Northeast, Mid-Atlantic and Midwest cities and representatives in 13 international markets. First International Bancorp is the parent company of First International Bank.

Truckers, Airline & Ocean Freight Carriers
Barter Excess Capacities Online

Collaborative Logistics Exchange (CLE), a web-based freight exchange system will enable shippers, carriers and forwarders to easily notify their trading partners of excess capacity. Thus creating a frictionless marketplace for spot bids, or real-time bartering of prices and service agreements.

CLE is designed to allow each trading partner to manage its own private trading partner communities. It enables a personalized trading exchange with its key suppliers and customers, to operate via the internet.

Special Report From BarterNews
First of a Five-Part Series...

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.

(Your trade exchange also provides this information to you in the form of 1099Bs, "Proceeds from Broker and Barter Transactions.")

However, some of these barter deposits may not be taxable income. And over the following weeks we will look at 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 barter credit income.


A taxpayer is permitted under the law to give any other taxpayer up to $10,000 during a tax year, with no tax consequences of any kind to the donor or to the recipient.

But if a trade exchange member gives barter credits to another member (as a gift), the amount of the donation is posted in the account of the recipient. And there is no way for the barter company to recognize the tax nature of the deposited funds, any more than your bank can identify which of your cash deposits are taxable.

Barter In The Mainstream News

  • The Seattle Times (newspaper) published a major story on October 13th titled, "Old Business Practice of Barter Gets a Modern Twist." Seattle-based was the focus of the article.
  • Business Week's coming issue will have a story on the various companies.
  • World Trade magazine's December issue will be featuring a story on the trade exchange industry and their growing global presence.

Here and There...

  • A new site,, is one of several start-up sites now launching to let corporate treasurers and chief financial officers trade online.

    It will be a site for banks, allowing them to get quotes from multiple providers on products such as interest-rate swaps, currency trades, foreign-exchange options, loans, and deposits.

    In years to come, expect to see the barter industry's currency, trade dollars, included in this list.

  • Mutual-fund advertisements occupy many pages in magazines and minutes on television. Mutual fund companies are spending 2% (on average) of their gross sales on advertising to get their message across.

    This is a much smaller percentage of advertising than the companies, which spend upwards of 50% of their annual sales on advertising to build their brands.

  • There's a euphoric real estate market in European cities with the rise in economic growth and consumer confidence. As prices for the residential real estate moves upward, barter through the European trade exchanges will flourish. Additional barter sales and profits will be needed to cover those soaring prices.

  • City and state officials in states around the U.S. are increasingly entering into barter agreements with web companies willing to build the infrastructure and applications for putting local government online.

    In exchange the web companies get a cut of transaction fees like traffic-ticket payments or water-bill payments. Effort now is exchanged for an income-stream down line.

  • Cuba's fledgling biotechnology industry is trading the global marketing rights of its meningitis vaccine breakthrough to SmithKline Beecham of Belgium for food and medicines.

  • We've reported on CBS's head man, entrepreneurial Mel Karmazin, and his many savvy barter radio and TV time for equity ownership in internet companies.

    The Industry Standard, a newsmagazine about internet economy, editorialized in its October 18th issue about CBS' recent decision to acquire a majority stake in IWon. The magazine contends that it's the crudest of all the internet models, and that CBS is displaying a deep lack of imagination in backing a sweepstakes game. Furthermore, they are admitting that developing compelling content on a site is a difficult thing to do.


September 28th: Here's a parallel story to our Venture Frog Incubator Trade story... One of the hottest entrepreneurial-minded outfits around is eCompanies, a $130 million venture-capital firm and business incubator, begun by EarthLink Network founder Sky D. Dayton and former Walt Disney web honcho Jake Winebaum.

In exchange for at least half of the equity in your company, eCompanies lends office space, business contacts, and technology and financial advisers. They are looking for business-to-business and consumer-oriented e-commerce, not infrastructure oriented companies.

September 28th:, a clearinghouse for unsold advertising space, recently expanded from the $2 billion online ad market to the $200 billion off-line market, offering such outdoor spaces as buildings, buses, taxicabs, and stadiums.

Now Adauction is taking to the water! Last week the company announced it is auctioning off newly created ad space on a "billboard by the bay," a 40-foot by 80-foot rectangular sail hoisted on a barge in the San Francisco Bay.

October 5th: Charleston, South Carolina-based Cinnabar Enterprises (OTCBB: CINNE) reported a 214% gain in barteredtrade volume during the last 90 days. The company services more than 1,100 clients throughout the Southeastern part of the U.S.

Coming soon. . .

  • How to report a corporate barter transaction
  • New business and consumer web sites for trading
  • Barter industry's two trade associations
  • All barter is not taxable (second in a series)
  • Follow-ups on previous articles


We welcome your comments, questions, and observations.
? Copyright BarterNews 2003. Redistribution of BarterNews content expressly prohibited without the prior written permission of BarterNews.