Everything is Barter

December 18th, 2017
taxes
If you drive me to the airport and I give you money, that's taxable. Or if we agree that I'll babysit your kids in exchange for the ride, that's taxable as well, being barter. [1] On the other hand, if you give me a ride to be helpful, and then later I watch your kids as a favor, I think that's not taxable. But I don't see how to draw the line here: instead of transacting in money or direct barter we're transacting in favors or social capital.

In some cases I think it may come down to whether we make an explicit agreement vs doing things informally. If I let a friend live with me because I have a spare room, and then they decide to spend weekends fixing up the house out of gratitude, I think that's not taxed. But if we explicitly agree that I will waive rent in exchange to 12hr/week of house repairs that probably is taxed. Penalizing people for being explicit in their interactions with each other seems harmful, though, as clarity in expectations can be a good way to reduce conflict.

Other things seem even messier. What if I take a job that pays less because I value the experience I'm gaining. What if it's for the fun? Prestige? Social impact? Or imagine I live in the US and want to donate to a charity that's tax-deductible in another country, and you vice-versa, so we each agree to donate to the other's charity. Or I agree to give up eating pigs in exchange to your giving up eating eggs. Is any of this taxable? Should it be?

Mostly I'm just pretty confused. I think it's possible that lots of things are technically taxable but most people don't report them and the IRS doesn't really expect them to be reported?

[1] Barter in the US is taxed as if we had each performed our services for "fair market value" in money. So if $50 would have been a fair price for the ride and for the babysitting, we each report an additional $50 of income.

Comment via: google plus, facebook

Recent posts on blogs I like:

Pay For Fiction

Against piracy

via Thing of Things February 29, 2024

When Nurses Lie to You

When the nurse comes to give you the flu shot, they say it won't hurt at all, right? And you trust them. Then they give you the shot, and it hurts! They lied to you. A lot of nurses lie to children about shots and blood draws. Part of it is they probabl…

via Lily Wise's Blog Posts February 28, 2024

How I build and run behavioral interviews

This is an adaptation of an internal doc I wrote for Wave. I used to think that behavioral interviews were basically useless, because it was too easy for candidates to bullshit them and too hard for me to tell what was a good answer. I’d end up grading eve…

via benkuhn.net February 25, 2024

more     (via openring)