Michigan Says Enough To Fed: Takes Matters Into Own Hands As It Starts Using Own Currency...And Gold

Tyler Durden's picture

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The Rogue Trader's picture

Jack Booted Thugs seen heading to Central Michigan....

Number 156's picture

Uh not so fast.


Topic 420 - Bartering Income

Bartering occurs when you exchange goods or services without exchanging money. An example of bartering is a plumber doing repair work for a dentist in exchange for dental services. The fair market value of goods and services received in exchange for goods or services you provide must be included in income in the year received.

Generally, you report this income on Form 1040, Schedule C (PDF), Profit or Loss from Business. If you failed to report this income, correct your return by filing a Form 1040X. Refer to Topic 308 for Amended Return information.


ozziindaus's picture

but butI only received a dollars worth of dental.

PS what ever happened to doing a mate a favor?

YourAverageDebtSlave's picture

Just how does the IRS intend to audit that?  And do you start auditing the favors I do for friends because I know I can count on them to return favors if I need them?  Or perhaps I should price each time I get laid from a girl in exchange for taking her out on a date.  Doesn't bartering happen implicitly on a regular basis within friendships, families and relationships.  Surely the IRS can't track that.

Clayton Bigsby's picture

Exactly, fuck that.

Dear IRS,

Prove it.


Dissent of the "Governed"

PS  eat a dick

living on the edge's picture


That is some funny shit! By the way, I guess we can bypass all the coming 1099 crap in the process.

ozziindaus's picture

Or perhaps I should price each time I get laid from a girl in exchange for taking her out on a date.

That's a case for the local police.

But you're right. It just can't be enforced. If it can, it will tear communities apart. Everyone would be carrying stop watches to book every second of conversation since it could be misconstrued as advise. Imagine helping a granny cross the road and in return getting a BJ. How do you account for that? It's crazy.

Jendrzejczyk's picture

How in the hell did you jump from helping a little old lady across the street to her giving you a BJ in return?

"It's crazy" indeed. :)

Iam_Silverman's picture

"Imagine helping a granny cross the road and....."

And for all these years, I tought those helpful By Scouts were just trying to be polite!

Apostate's picture

I think it's a good thing that people are turning to barter.

But if the IRS wants to lock you up or kill you, they can do it. There's nothing they need to "prove." It's not like Law and Order where the gestapo have to "make a case."

No. They are the law.

The Rock's picture

there are not enough gestapos to enforce it...

Jendrzejczyk's picture

Some of the burden of proof has shifted to the IRS. From The CPA Journal Online:

Prior to the IRS Restructuring and Reform Act, there was a long-established principle of tax law that the IRS’s determinations in the statutory notice of deficiency were presumptively correct (Welch v. Helvering [290 U.S. 111 (1933)] and Rule 142(a), Tax Court Rules of Practice and Procedure). The taxpayer also bore the burden of proving that the IRS’s determinations were incorrect. A taxpayer would not prevail by merely asserting that the return was correct as filed. Other evidence was necessary to substantiate the deductions that the taxpayer claimed [Wilkinson v. Comm’r, 71 TC 633 (1979)]. The IRS ordinarily requested from the taxpayer the information that was needed to substantiate an issue during the audit. If providing the information made the issue no longer contested, it would then be considered resolved between the parties.

The IRS Restructuring and Reform Act introduced IRC section 7491(a)(1), which states that if a taxpayer introduces credible evidence about any factual issue relevant to ascertaining the liability for any tax imposed by subtitle A or B, the IRS will have the burden of proof with respect to such issue.

Kegfreak's picture

Or perhaps I should price each time I get laid from a girl in exchange for taking her out on a date. 


It can't be that hard to figure out how much one dinner in the last five years cost you! ;p

MayIMommaDogFace2theBananaPatch's picture

Many, many dinners...not so much exchange.  ;)

jkruffin's picture

What's your point N156?   If you exhange a service for goods or vice-versa and there is ZERO profit, there is no taxable income to report.  He gave up a certain amount in expenditures that equaled what he got in return.  There is no income gain or loss.  Good bye IRS.  The IRS should have been abolished many many years ago, but the sheep are too afraid to stand up to them.

Number 156's picture

Well, If I make $45,000 this year, and bought $45,000 worth of asparagus, does this mean that The Fed wont ask me for my money?


tmosley's picture

If you used that $45,000 of asparagus to make the $45,000 in question, then no, the IRS won't ask you for any money, as you have made nothing.  You see, with barter, it's REALLY hard to prove net income, as it becomes almost impossible to price expenses, and you can always overprice your expenses and underprice your compensation.

DiverCity's picture

That is exactly NOT how the infernal revenue service views the transaction you hypothesize.  You are taxed on the value of the good or service you receive in exchange for the good or service you provide.  It's the government, man!  It'll do what it damn well pleases and you will conform or else (the else being government violence).

PierreLegrand's picture

Randy Weaver would have liked to comment but unable...

hungrydweller's picture

No problema, dude.  Take REAL goods and services in exchange for your goods and services.  The fiats you save or the fiats you get from exchanging received real goods (which increase in the amount of fiats you can get for them) you can then use to pay the goobermint back in its own worthless scrip.

Gordon_Gekko's picture

IRS is nothing but our ruling mafia's collection agency. Please tell me you IRS morons who will determine "fair value" of those goods and services? I can charge WHATEVER THE HELL I WANT for services performed and do can the other party including ZERO i.e. free...ever heard of the word "free"?

Bah! only morons and sadists will report "bartering income", although, since we all have government guns pointed at our heads, it would better to keep it under the radar from them THUGS.

RockyRacoon's picture

One to file away for the archives, GG:

Hearing Today on State of U.S. Coins and Currency  

By Patrick A. Heller


At Freedom Fest 2010 conference in Las Vegas two weeks ago, Jerry Jordan, who was president of the Federal Reserve Bank of Cleveland from 1992 to 2003, was asked if all the gold in Fort Knox was still there.  Jordan affirmatively stated that all the gold that the U.S. owned at Fort Knox was still there. He immediately revised his statement to say that all of the gold that the U.S. claimed to have in “custody” at Fort Knox was still there.  There is a huge difference between “owned” and in “custody.” Jordan’s comment is not an official acknowledgement that at least some gold reported as being held by the U.S. government is owned by others.  However, it does heighten the suspicion that this could be true.


knukles's picture

Believe that the FRBNY also vaults some US gold.

jkruffin's picture

Indeed, we just all claim we are doing "GOD'S WORK" and its all charity for each other.  We swapped chairty services.  Then we write off the charity and get Earned Income Credit check back from IRS like the welfare recipients do who pay nothing in.

suckapump's picture

Maybe this will get people's attention, because (despite its claims) I really don't think this was simple enough for people to understand. I have been trying to explain this to people, but as soon as I mention "treasury bonds" their eyes glaze over. I have found the following metaphor helpful in addressing the commoner:

Imagine the following. A banker flanked by uniformed police officers kick in your door and run into your living room where you're reading a nice book during your time off from work. One of the cops holds a gun to your head while the banker says, "Give us $10,000. We'll give it back to you in a year, maybe." You don't have the money, but you don't want to get shot or go to jail, so you max out your allowable cash advance balance on your credit card at 10% interest (if you're lucky) and hand over the cash. They leave to go "offer" your neighbor the same deal.


For twelve months, you make minimum payments because if you don't, the credit rating on which you rely to survive will be obliterated. At the end of the year, the bank hands back $9,000 but defaults (welches) on the remaining $1,000. You use what you got to pay down your credit card, but you can only pay down part, because not only are you short the principal, but you've incurred additional interest (not to mention the minimum payments you've been making out of your hard-earned salary).


Here's the insidious part. The entity that was accepting all those minimum payments and collecting interest was the same bank who came into your house and put a gun to your head to "loan" it the money in the first place.


Six months later you get a notice in the mail that a class action suit was filed on your behalf. The filing firm is extremely pleased to announce the class has reached a settlement with the bank who, in order to atone for its sins (while admitting no wrongdoing, of course) is lowering the interest rates on its credit cards by 0.5% and will refund the previous three days' interest charges on all of its credit accounts which are in good standing. Due to a billing cycle "error", this only includes the 1% of accounts with the largest credit limits.

That seems to perk up some ears. ;o)

Calculated_Risk's picture

Yeah, you gotta love the hypocrisy of the gov being able to fraudulently create money, the expect you to honestly tell them how much they're supposed to steal from you!

Do as I say, not as I do doesn't work for me.

Reductio ad Absurdum's picture


You can, but the IRS will still (officially) claim you owe taxes on the "fair market value of goods and services" exchanged. They will decide what is "fair market value" and it will not be in your favor.

Of course, just don't tell the IRS about your bartering.

The rules are there because just imagine if they didn't have such rules -- people would barter like crazy and the IRS would make no money.

Rebel's picture

Yes, and is similar to private party car sales. If you sell a car to someone for $10,000, and then go to DMV to have title transfered, and both parties claim car was sold for $2,000 to save on sales taxes, state will require payment of sales tax on the book value of the car, not the claimed sales price.

False_Profit's picture

...they tried that in kansas and the public outcry was so great that they backpedalled...sales tax is paid on the amount on the bill of sale.

Rebel's picture

If I remember right, a few years ago people got in trouble with the IRS for bartering. They had set up a pretty big and organized "coop", and the IRS went after them. For small "one off" trades likelihood of getting caught would be small, but as things become more organized it hits their radar screen.

Another way people get caught would be to get ratted out. Lets say a dentist routinely trades services for plumbing work, landscaping, yard work, etc. Then, receptionist gets POd about something, and turns him in. Then, they would come after him.

It is true that they do not have enough agents to catch everyone, but a strategy they use is to be so obnoxious and intrusive, that when they do catch someone, they make it so painful that it scares everyone else. 

illyia's picture

Define "fair market". I doubt there will be a reliable standard of what anything is worth within the next six months.

Like any mark-to-market, "fair" will be what someone will be willing to pay for it. Like your house you paid 350 K for two years ago - that was just auctioned off for 65 K to a plumber... who has plenty of business and doesn't want to tie his money up in a bank(rupt) institution...

Filling that cavity?

That'll be two chickens, please...

seventree's picture

Topic 420 - Bartering Income

Bartering occurs when you exchange goods or services without exchanging money. An example of bartering is a plumber doing repair work for a dentist in exchange for dental services. The fair market value of goods and services received in exchange for goods or services you provide must be included in income in the year received.

Generally, you report this income on Form 1040, Schedule C (PDF), Profit or Loss from Business. If you failed to report this income, correct your return by filing a Form 1040X. Refer to Topic 308 for Amended Return information.

This has been IRS policy for years and I'm surprised more people aren't aware of it. From their standpoint there is no such thing as barter. In the example given both the barber and the plumber performed a service and received cash payment, and owe income tax on that payment. The fact that the cash values of the services were identical, and therefore the parties involved did not bother to physically exchange dollar payments, is not relevant from the IRS standpoint. Also, the earnings declared by each for taxation must reflect "fair market value." In other words, the barber and plumber cannot put an arbitrary value of $1 on their respective services because such work is not typically done at that rate.

Please note I am NOT defending the IRS, or disagreeing with anyone else (such as the comments above). I just think everyone should know what they are getting into. The vast majority of barter transactions are not pursued by the IRS because they don't know about them and/or the amounts are too small to bother with. But if this trend becomes economically significant, we can expect closer scrutiny. And anyone who tries to fight the government's bagmen with Constitutional or common-sense arguments will lose. They always do.

So please, barter away with my blessing. Just don't get too visibly successful at it, and try to stay out of the news.

EDIT: Several commenters above issued the challenge "define fair value." This is a good point rationally, but the IRS is not required to be rational. They will define it, a judge will approve it, and the defendent will pay it or come to grief. Their are plenty of rulings on record to demonstrate this.

If that pisses you off (as it should) consider waitpersons and others whose livelihood depends largely on cash tips. The IRS has defined minimums for income typically received in this way, and these people can be forced to declare the minimum whether they actually received it or not.

Rebel's picture

Yes, fair market value is what the IRS says it is. You can argue, but don't be surprised to come home and find a lock on your home, and a yellow seizure notice posted on the door. Like you, I am not defending IRS, just saying I want to stay off their radar screen.

I had a friend that worked at a Silicon Valley start up company. He had stock options, and the value shot up, and then the company went bust. He ended up with nothing, and never exercised his options, and made not a single cent. Due to a strange set of technicalities, the IRS showed that he owed on the gains when options were worth something, even through he did not exercise them, because of some financial "event" the company did related to a financing round. End result was that the IRS came after my friend, who was just a normal working guy. After several years of misery, he settled with them . . . in addition to any taxes he owed in future years, he would in addition pay the IRS $50K per year for what would pretty much be indefinitely. Since he was a normal working guy, it would mean that he pretty much would be working for free from then on. I have lost track of the guy so don't know how things finally ended up, but last I heard he said he was just not going to work any more and sit at home.

Mercury's picture

Yeah, good luck tracking down even 10% of bartering activity if this kind of thing cathes on.

There may even be an app for that.

Pedro's picture

I had an IRS auditor ask me directly about bartering.  Of course, I said no.  This clause is disastrous for all of us males that perform honeydo's for our wives or girlfriends in exchange for ... excuse me, while I go out and throw the trash and clean out her van.

GoinFawr's picture


Hahahah! I swear, I've never seen that before in my life! I'm sorry to go on about it but it's getting late and it caught me off guard... hahahaha! <wipes tear>

Thanks Pedro.

drbill's picture

No shit. Once this gains a little momentum it won't be long before the Fed's paper is declared the ONLY acceptable money. Welcome to the USSA.

JLee2027's picture

Unenforceable. People will move underground faster than you can believe. There has to be enough silver/gold to make it work though.

GeorgeHayduke's picture

I'm guessing the underground economy is already in full swing among many people. People are tired of the crap and looking for anyway to cheat the system. Why not? the system has been cheating most of us for years.

dnarby's picture

People have been bartering in states like New Mexico for decades.  They'll just do more of it.

Eventually, this will cause things that can be tracked to be taxed to the moon (think anything imported).

Cathartes Aura's picture

Ithaca Hours, bitchezzz.


some people have been doing this for. . . decades.


dussasr's picture

There is and always has been enough gold and silver to make it work.  The scarcity of gold and silver is pricisely what makes it work in the first place.


Gold and silver would simply cost a lot more in dollars under such a scenario - or more correctly, dollars would head toward their intrinsic value.

Cathartes Aura's picture

people exchange their time/talents for other's time/talents - precious metals don't even enter the equation. . .

the concept is that the individual human is the "wealth" - not something outside of themselves they've accumulated. . .

it's not a "scheme," it's a way of being.

Oh regional Indian's picture

"the concept is that the individual human is the "wealth" - not something outside of themselves they've accumulated. . .

it's not a "scheme," it's a way of being."

Nicely said CA.



rrbluefin's picture

Not just silver and gold.  Whiskey, cigs, TP and tampons also work. 

My wife thought I was crazy with the tampon idea until she went to a woman's retreat one weekend.  Two unfortunates had their little monthly "visit" and were begging for any type of feminine hygene product.

And once again, hubby is proven correct :-)