Originally Posted by
Steven Douglas
It doesn't need to be, as it is taxed, even though there is no "gain" or profit involved.
Here is where these right-nasty bastards play both sides of the currency debasement fence (and why Ron Paul so vehemently demands that value be defined by Congress)
We have a system set up where every exchange is infinitely taxable. You pay for a good out of currency that has already been taxed at all levels of government. Your trading partner did likewise with his good. Both of the bartered goods have presumably already been paid for with income that was already taxed. When you trade items in this way, there is no BUYER and SELLER involved as far as the IRS is concerned. Suddenly, both parties are SELLERS, and the IRS views the "fair market value" of each item in trade as INCOME TO BOTH PARTIES -- even with an even exchange.
Now that they have accomplished that neat little trick, the only question remaining is whether there was a GAIN, or profit involved. And now we get back to the another neat little trick, where a LOSS OF CURRENCY EXCHANGE VALUE EQUATES TO A "CAPITAL GAIN".
If you don't have the original receipts, then the IRS will conclude that the items were somehow free to you, and therefore 100% INCOME, or 100% "profit". But even if both you and your barter partner have original receipts there is still a problem, and you're both going to lose in the process.
Let's say that each of us bought our different item in exchange in 1978. We each paid the same price (let's say $1,000), and both items appreciated equally in "value" (using that term VERY loosely), such that they only kept pace with inflation. The new "fair market value" (let's say $3,500 in 2012) would only be what each item would sell for in 2012.
Once the trade is made, EACH OF US has received $3,500 in INCOME. That is pure INCOME to both of us if we don't have receipts. WITH RECEIPTS, however, each of us will be seen as having made a PROFIT of $2,500!!! All 100% taxable income. The IRS does not participate in CPI adjustments, and makes no such distinctions. So what you PAID for your item in 1978 is your ONLY PROOF--your receipt--of cost of goods that you can deduct as being not part of the 'profit'. What you RECEIVED in barter exchange for that item has a fair market value that is only reckoned in 2012 terms.
That's why there is no need to make barter illegal. It's already part of a state racket that is positively criminal, and they'll only seek ways to control and regulate it even more.
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