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

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November 9, 1999

In this week's report. . .

  • Auctions of surplus goods compete with barter companies
  • Special Report...our second in a five part series
  • Airline excess capacity bodes well for barter industry
  • Bartering "here and there" around the world

TradeOut.com Aims to Become Major Competitor
To Barter Companies

TradeOut.com, with listings of $500 million of business equipment, seeks to become the eBay of the business-to-business market, and in the process will become a major competitor to those in the barter business.

For decades the barter marketplace, especially corporate barter companies, have handled surplus or excess inventories for Corporate America. And while the expansion of corporate barter continues, TradeOut.com, a company which was launched last June, is off to a most impressive start. The Ardsley (NY)-based company is betting that U.S. corporations will be eager to move their odds and ends over the internet.

TradeOut's founder and CEO, Brin McCagg, said he emulated much of eBay's business plan when he formed his company...but there are substantial differences. TradeOut allows sales to be made on a sealed bid (first-come, first-served basis), as well as by auction.

But unlike eBay, which keeps most auctions running a week or less, TradeOut will allow items to be on the block for as long as a year. (Items range from surplus office furniture to 10,000 pairs of orthopedic pantyhose.)


Special Report From BarterNews
Second 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.")

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 trade dollar income.

Trade Dollars Received As Loan Repayments

As a member of a trade exchange, you may lend some trade dollars to another member. Later, when you are repaid with trade dollars deposited into your account, they appear as credits.

On your next monthly statement these trade dollars that have been repaid to you will appear as a "sale" or income transaction. And at year-end it will be reported as such on the 1099B Form.

Although trade dollars received as loan repayments 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.

It should be noted that if you are charging interest on the loan, either in the form of trade dollars or in cash, the interest is reportable as income in the year in which it is received.

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.


Airlines Excess Capacity Affects Earnings

Psst... There's Some 700,000 Business Owners
Who Will Fill Those Seats Using Barter

The major airlines, bedeviled by excess capacity, are cutting their fares (at a time of higher fuel prices) and have reported lower earnings. Consequently, there's more capacity now...up some 8% over last year. However, the demand for tickets hasn't kept pace.

In addition to the cutting of fares, the bartering of empty seats through the commercial barter industry is a smart business move that should expand beyond today's smaller regional carriers. It's a conduit that won't affect their cash business, yet it provides them value for a wasting asset. One that's irretrievable once a plane takes off.


Here And There...

  • BellSouth Advertising & Publishing Corporation inked a 3-year barter agreement with the soon-to-open New Orleans Arena, a new 19,000-seat facility located next to the Louisiana Superdome. They will obtain high-visibility advertising exposure on the huge scoreboard hanging in the middle of the arena, as well as message boards hung in all four corners.

    In exchange, the New Orleans Arena acquires use of a custom-designed audiotext product called 24 Hour ArenaLine. It features "press 1, press 2" technology with direct-connect capabilities and provides voiced information to callers seeking information on specific events, ticketing, suite and club seating, directions, etc. The ArenaLine will be featured in "The Real Talk" section of the 2000 edition of The Real Yellow Pages from BellSouth, as well.

  • ecom ecom offers a combination of trading venues...auctions, classifieds, and Swap 'n Haggle...for buying and selling merchandise through the internet. The company has created a one-of-a-kind trading community to provide consumers with more choices. A $36 annual fee entitles sellers to list an unlimited number of items on their web site, www.ecomecom.com. Buying privileges are free.

  • Real estate acquisitions of homes and small apartment buildings are especially important for members of trade exchanges in Australia. Reportedly, government pension and retirement benefits are being trimmed. So entrepreneurs are taking matters into their own hands and bartering for real estate to secure their long-term security.

  • According to Merrill Lynch's entertainment and media analyst, Jessica Reif Cohen, the big media companies (CBS, NBC, ABC and Fox) will be dominant players in the internet arena. She says they will muscle their way in because they have unparalleled assets, and on top of that they have the ability to reuse programming. How can anyone compete with that, she asks? Cohen, incidentally, has been ranked as Institutional Investor's No. 1 entertainment analyst for three consecutive years.

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. . .

  • Los Angeles barter economy poised for growth
  • $15 billion exchanged in outsourcing services
  • Bartering "here and there" around the world
  • Warrants bartered for loan restructuring
  • The $310 billion business-to-business marketplace that competes with the barter industry
  • New business and consumer web sites for trading

 

We welcome your comments, questions, and observations.
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