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Trade Dollars with other startups. Book it as revenue

revswap.ai

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Re: Trade Dollars with other startups. Book it as revenue

#131

Post by thih9 »

andix wrote: post #127
bryanlarsen wrote: post #69

Earlier quoted context omitted.

> The part that makes it not fraud is that both parties do actually do the work. It's far more nuanced than that. If you do the work but undervalue it, it's likely tax fraud. If you do the work but overvalue it, it's likely investor fraud. Even if you fairly value the work it still might be investor fraud. The vendor may have been chosen not by merit, but by its willingness to accept an exchange of services. Saying y…

> If you do the work but undervalue it, it's likely tax fraud Probably not, it's just giving a discount. Nothing wrong with that. Many companies sell goods or services below cost. To gain other benefits like market share, or new customers. Why not do it to get something else essential from another company? > If you do the work but overvalue it, it's likely investor fraud It probably depends on the situation. If it's…

> Probably not, it's just giving a discount. Nothing wrong with that.

Discounting and undervaluing have differences, one of them is transparency. As you say, many companies offer discounts and don’t hide that. People who commit tax fraud usually aren’t transparent about their “discounts”.

Re: Trade Dollars with other startups. Book it as revenue

#132

Post by marcosdumay »

outside1234 wrote: post #60
PeterStuer wrote: post #51

It's weird to keep referring to these AI behemoths as "startups".

They have no scalable business model that yields profit outside of raising more investment, so yes, somehow they are still startups

A startup is a small, agile company that is trying to grow.

Those things have more money than the world, and can't change anything about their business without the house of cards of their investment image falling down.

Re: Trade Dollars with other startups. Book it as revenue

#133

Post by bombcar »

gizmo686 wrote: post #71
bombcar wrote: post #64

Earlier quoted context omitted.

If I spent $5k as a business to realize $5k in revenue the tax is zero (ignoring as you say sales VAT, etc) The problem comes when the $5k you “traded” also didn’t cover the actual expense to provide the $5k you “earned” - now you have an actual loss even if cash didn’t flow.

I could imagine somewhere trying to make that the rule, but I have a hard time imagining that rule being enforceable. At least for US federal taxes, losses do not need to be tied to revenue. As long as they occur in the same tax year, you can deduct. You can also carryover losses to future years, or pass them through to personal income deductions; but the rules there get more complicated.

Yeah from a tax standpoint you're fine, but from a "whole business cash-flow" concept you could end up in the hole even though on paper you traded $5k for $5k (accountants might have it booked somewhere as "goodwill" or something to make the books balance).

Re: Trade Dollars with other startups. Book it as revenue

#134

Post by thih9 »

andix wrote: post #129
elil17 wrote: post #113

Earlier quoted context omitted.

> A company can value it's services as it chooses. If the work is performed for $1 or $5000 the government doesn't get a say in that. That's simply not true. You may get a certain amount of leeway, but it has to be reasonable.

No, it doesn't have to be "reasonable". Its only illegal if it is used to cover up some other illegal thing. For example giving huge discounts below cost only to family members, which is more or less like paying them money without paying taxes for it.

Note that we’re talking about two companies exchanging services.

When two companies undervalue the services that they offer to each other, they pay lower taxes. This is the illegal part.

Re: Trade Dollars with other startups. Book it as revenue

#135

Post by tstenner »

thih9 wrote: post #134
andix wrote: post #129

Earlier quoted context omitted.

No, it doesn't have to be "reasonable". Its only illegal if it is used to cover up some other illegal thing. For example giving huge discounts below cost only to family members, which is more or less like paying them money without paying taxes for it.

Note that we’re talking about two companies exchanging services. When two companies undervalue the services that they offer to each other, they pay lower taxes. This is the illegal part.

If the expense is tax deductable, it mostly doesn't matter whether you have $10 earnings vs $10 business expenses or $10K.

Re: Trade Dollars with other startups. Book it as revenue

#136

Post by andix »

thih9 wrote: post #131
andix wrote: post #127

Earlier quoted context omitted.

> If you do the work but undervalue it, it's likely tax fraud Probably not, it's just giving a discount. Nothing wrong with that. Many companies sell goods or services below cost. To gain other benefits like market share, or new customers. Why not do it to get something else essential from another company? > If you do the work but overvalue it, it's likely investor fraud It probably depends on the situation. If it's…

> Probably not, it's just giving a discount. Nothing wrong with that. Discounting and undervaluing have differences, one of them is transparency. As you say, many companies offer discounts and don’t hide that. People who commit tax fraud usually aren’t transparent about their “discounts”.

Discounts are often not transparent. Have you ever seen a SaaS that lists "Enterprise pricing: contact us"?

It's basically saying they give you as much discount as you need to be able to afford the service. And those discounts are very secret by design.

Re: Trade Dollars with other startups. Book it as revenue

#137

Post by Flundstrom2 »

andix wrote: post #129
elil17 wrote: post #113

Earlier quoted context omitted.

> A company can value it's services as it chooses. If the work is performed for $1 or $5000 the government doesn't get a say in that. That's simply not true. You may get a certain amount of leeway, but it has to be reasonable.

No, it doesn't have to be "reasonable". Its only illegal if it is used to cover up some other illegal thing. For example giving huge discounts below cost only to family members, which is more or less like paying them money without paying taxes for it.

It might be legal in YOUR jurisdiction, but at least in the jurisdiction I'm in, it is not - AFAIK - legal to neither underwrite or overwrite costs on the sole purpose of avoiding tax or grooming the pig.

Re: Trade Dollars with other startups. Book it as revenue

#138

Post by Arodex »

ww520 wrote: post #66
gaiagraphia wrote: post #43

Earlier quoted context omitted.

VAT is a joke of a tax. It's quite incredible why the government concerns itself with chasing people's accounts around. What a waste. If something can't be monitored with minimal effort, it only serves to enrich the legal/accountancy/hr/admin priest caste. The amount of labour wasted on moving numbers around numbers is staggering. edit: Between the government and businesses, VAT costs 5% in admin fees to raise. In a…

VAT is a regressive tax. It hits everyone along the way, rich or poor. It hits the poor especially hard proportionally.

VAT is a progressive tax.

https://taxfoundation.org/blog/value-added-tax-vat-progressi...

Re: Trade Dollars with other startups. Book it as revenue

#140

Post by andix »

Flundstrom2 wrote: post #137
andix wrote: post #129

Earlier quoted context omitted.

No, it doesn't have to be "reasonable". Its only illegal if it is used to cover up some other illegal thing. For example giving huge discounts below cost only to family members, which is more or less like paying them money without paying taxes for it.

It might be legal in YOUR jurisdiction, but at least in the jurisdiction I'm in, it is not - AFAIK - legal to neither underwrite or overwrite costs on the sole purpose of avoiding tax or grooming the pig.

> on the sole purpose of avoiding tax or grooming the pig

Exactly. But it doesn't have to be used in this way.

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