Re: Anonymous Internet Barter.

From: Michael S. Lorrey (
Date: Fri Mar 10 2000 - 08:00:17 MST

Paul Hughes wrote:
> So here is the question, does the IRS have the legal right to tax me if I trade
> my old bicycle for a tennis racket? If the answer is no, then the system I
> envision will allow people to carry on the majority of economic activity tax
> free. Because in the end there is no difference between simple and complex
> trade. If the answer is yes, then my system still eludes the IRS because all
> economic activity is hidden by pseudoanonymous identities and encrypted
> transactions conducted on offshore computer systems.

There is no national sales tax, so there is no tax on your sale. If you
feel that the trade was an even trade, then there was no capital gain,
so again, there is no tax to pay, either capital gains or income.

Lets look at the worst case scenario: Now, if the IRS were as demonous
enough to say that you can only deduct 80% of the value of the item you
accepted as a business cost, but the item to traded to the other person
was valued at 100% of retail value, then the 20% difference would be
considered a capital gain. The other person would also have to pay on a
20% capital gain, as to them your item you gave them would be valued at
80% and their item the gave to you would be valued at 100%. So even if
neither of you makes any money, the IRS may still claim you made a
profit. I don't understand how the IRS could get away with making such a
claim though. If such a situation exists I know of several good tax
lawyers who are tax patriots (and who HAVE won cases against the IRS)
who would love to decimate that sort of IRS scam.

Billy: If you think that nobody gets away with not paying taxes, my
freind Thomas Monteleone can tell you about it. He's a suspense writer
(_Blood of the Lamb_, and others) who hasn't paid income taxes in over
20 years.

Mike Lorrey

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