Staff and wire reports • April 20, 2009 • From Lansing State Journal

Despite their modern popularity, paper and plastic still haven't snuffed out the most ancient form of currency.

Stuff.

And with a national economy in an historic slump, folks increasingly are setting aside their cash and debit cards to barter for goods and services.

"You can trade for most of the things you might want," said Kathy Valentine, owner of The Plant Professionals in Lansing.

Valentine said she's long traded her flowers and plants for things otherwise would have to pay cash for: snowplowing, lawn care and even electrical work and painting. Nationally, Craigslist's bartering postings were up almost 100 percent between January 2008 and January 2009, while U-Exchange.com, a Web site connecting people who want to barter, logged nearly 1.1 million page views between mid-January and mid-February, according to U-Exchange co-founder John Moore. During the same period last year, the total was 362,000.

"That's up 173 percent. When it really hit was January, after Christmas," Moore said.

"All of a sudden, you've gotta pay those bills. People didn't have to do it when things were going good."

Locally, Trade Network Inc. President Gary Kay said he's finding it easier to convince business owners to become members of his company, which runs an exchange to help businesses trade goods and services.

Money saver

The Lansing Township-based service, which Kay started in 1991, has about 1,200 members, spanning mostly from the Brighton area to Lake Michigan.

Members offer up everything from produce to oil changes to weekend getaways.

"We acts as almost a classified ads section," Kay said.

Members average about $5,000 in trades a year, he said. Trade Network takes a 10 percent commission on trades.

Kay said trading actually saves business owners money because they can offer up surplus goods that otherwise might be wasted for services they need.

Many folks don't realize that when tax time rolls around, however, federal law requires them to report trades as income.

Bartering is an exchange of property or services, according to Internal Revenue Service regulations, and the rules apply, whether it's a face-to-face transaction or between barter club members, said Terri Helge, a Texas Wesleyan University law professor and former accounting firm tax manager.

"This even applies to farmers who trade their produce for another farmer's produce," Helge said. "There is no threshold for a minimum amount.

"If you barter services for services or services for property, you're supposed to report it. It still surprises people, but it's well established."

Parties to a trade must report the fair-market value of what they receive, and the value will be accepted unless "the value can be shown to be otherwise," according to www.irs.gov.

"What you base it on is the fair-market value of what you receive," Helge said.

"If we didn't have this rule, think about how easy it would be: Every Wall Streetexecutive would just be paid in stock ... we'll give you food. We'll give you use of a limousine."

Tax considerations

David Stell, an Oklahoma City IRS spokesman, said there's no way to calculate how much bartering goes unreported or the tax dollars that go uncollected as a result.

But he noted that agents routinely ask taxpayers whether they've participated in bartering transactions when they're audited.

Moore questions the tax rationale. For example, what if you sold a bicycle you'd bought with after-tax dollars for cash?

"I don't understand that," Moore said. "You wouldn't be taxed for selling that in a newspaper."

But he's more concerned with his own business, which is free to traders and is advertiser supported. A flood of visitors to his site after a mention on "The Today Show" nearly crashed his server. The week following that national exposure was "over the top," said a weary Moore, who'd been up since 2 a.m.

"We don't see it letting up any time soon."

Comments (0)

Subscribe to this comment's feed

Show/hide comment form