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The weekly newsletter for everyone interested in barter--the world's most versatile business tool!

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November 23, 1999

In this week's report. . .

  • Third of a five-part series on non-taxable barter
  • Los Angeles barter economy poised for growth
  • New business and consumer web sites for trading
  • Barter syndication of TV programs in China
  • Bartering "here and there" around the world

Special Report From BarterNews Third 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. However, some of these barter deposits may not be taxable income.

(Your trade exchange also provides this information to you in the form of 1099Bs, "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.

Cash Purchased Trade Dollars

If you have a need for more barter credits, and are unable to borrow them, you can usually buy them from another trade exchange member often at a cash discount-sometimes as high as forty or fifty percent.

Although cash purchased (discount) trade dollars are not taxable, the IRS will expect you to pay a tax on all trade dollar credits...because they don't realize some of those credits fall into the non-taxable category.

In order to avoid paying taxes on non-taxable income you will want to discuss this with your tax preparer. When we publish the fifth article in this series we will give you more specific information on how you may report these items.


Greater Los Angeles Economic Output
Outstrips Barter Community

The Los Angeles region, defined by UCLA geographer-economist Allen Scott, extends from Santa Barbara down to Tijuana. The all-inclusive population is 17 million, and it is one of America's global regions with economic output of more than $500 billion a year.

That's considerably more than the economy for the entire country of Mexico, the Netherlands, or Australia...and nearly as much as Spain or Canada.

This dynamic region is poised to see additional trade exchange activity with new barter companies stepping into this marketplace, as barter activity in Southern California is but as fraction of what it could be. Now, only a handful of exchanges populate this enormous economic region.


ClassicVision Entertainment Acquiring TradersWorldwide.com

San Diego-based ClassicVision Entertainment has signed a letter of intent with a new internet company, TradersWorldwide.com (TWC).

TWC offers specific web sites for businesses and consumers to trade, through classified advertisements and auctions. The company is in the process of securing web sites for every state in the U.S. and the provinces in Canada, before expanding globally. It envisions providing over 500 web sites for these trading activities.

TWC is also set to offer franchise opportunities for these web sites once they're launched. The first of these virtual sites, Oregontraders.com, is already online. The balance of the 50 states is expected to be launched prior to year end.

John Bauska, President of ClassicVision Entertainment, exclaimed, "We are especially excited to share the vision with TradersWorldwide in bringing the first virtual franchise opportunity online."


United Media Holdings Major Barter Syndicator

United Media Holdings, a leading Hong Kong-based diversified media and entertainment company, was founded in 1987 by CEO Danny Hui. Initially a full-service production house, today they are a major pioneer of barter syndication of TV programs in China. Their network in China now covers over 250 million TV households with a potential audience of 900 million.

The company is in the process of establishing a Chinese language entertainment-focused internet portal, ChineseE.com. The new effort will enable United Media to leverage their media expertise, as well as their entertain ment-programming library, and well-established relationships with the leading advertising agencies and broadcasters in the region.


Here And There...

  • Almost half of all American households now own stock or mutual funds, a whopping 125% increase over the past 15 years. And this dramatic demographic change is causing a shift in public opinion away from government programs to investor-friendly policies, according to a study just released by the Cato Institute.

    The nation's 76 million stockholders have "internalized their new role as capitalists" and this change has fundamentally altered the relationship between labor and capital. As wage earners become owners of capital, they increasingly favor policies that reduce taxes on savings. And they are highly skeptical of government investments, such as Social Security. By a margin of more than two to one, workers as a whole said they would rather rely on work-based contribution plans than on Social Security for retirement income.

  • Gateway has signed on for a $20 million barter arrangement and thereby becomes a major backer for the 2002 Winter Olympic Games. By replacing IBM, Gateway will be "The Official Olympic Computer Hardware Sponsor." In exchange for being able to use the Olympic name and logo in its advertising and marketing efforts, the San Diego personal-computer maker will supply the Olympics with more than 5,000 computers along with track results, statistics, and standings during the games.

  • In a previous issue we reported on an ingenious barter arrangement that cemented a strategic tie between companies. We continue to see evidence of this, as large vendors and suppliers "trade" with one another in some unusual manner to solidify their relationships. For example, Samsung Electronics, a supplier of PC-components gets special consideration from buyer, Dell Computer. Dell recently purchased $200 million of convertible debt (convertible into Samsung stock). The two companies have signed a 5-year, $8.5 billion supply agreement.

PAID ANNOUNCEMENT:

Executive Director Position

The International Reciprocal Trade Association (IRTA) is seeking to fill the position of Executive Director, to lead the 200-member organization into the new millennium. The Director must be able to manage all aspects of this 20-year-old, Chicago-based, business organization across international lines.

This individual will work closely with business and consumer media, as well as members of the association (globally), the large board of directors, and its committees...plus maintain a close relationship with the Corporate Barter Council. The Director will also manage an administrative staff, which conducts IRTA's day-to-day operations.

The Director is not required to live in Chicago. He or she will be very instrumental in coordination IRTA's annual congress, and computer knowledge is recommended.

Send résumé to Sheila Gidley at IRTA: fax (312) 461-0474, or e-mail: admin1@irta.net.


Coming soon. . .

  • Warrants bartered for loan restructuring
  • Is a web currency evolving?
  • Bartering "here and there" around the world
  • South Americans bartering on internet

 

We welcome your comments, questions, and observations.
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