> 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.

> 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.

Whether it you think it should or not depends on your personal preferences, but in practice the government does get a say in anything that it deems to be an undue way to reduce your taxes.

Barter would be much more common if it was a legal way of avoiding taxes.

> 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.

It isn’t that black and white. If you are being paid in cash, you can charge whatever you want, that is true. But if you are exchanging goods or services for other goods or services, the government is going to care how you value that transaction.

Tax law is guilty until proven innocent.

Investor fraud is usually brought as a civil case and takes a balance of evidence approach.

Since enforcement is stochastic and rare these practices are pretty common. The freedom to do ‘whatever’ is really dependent on the discretion of the government and investors. Most companies can and do fly under the radar but have to be careful not to piss off the wrong people.

> If the work is performed for $1 or $5000 the government doesn't get a say in that

What if you're getting paid in landscaping?

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> 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”.

SpaceX and Tesla’s not-so-arm’s-length transaction are like, textbook cases for fraud

It amazes me investors or the sec will put up with it

Article 1 judges in US Tax Court?

That's a bit jumbled. You can gain clarity one level up the abstraction layer. Money is a note that means a debt is owed.

Not quite. At least the one I found is some trickle down economics myth.

The one op is referencing is more like the dollar is used to pay off the waitstaff, who pay their rent to the landlord, who pay their over due taxes, so that the government can issue a refund to the cafe owner. The dollar ends up back in the hands of the cafe owner, who puts it back down on the table with all the debts paid off.

lol, no, unless you are saying "revenue" as in "revenue under my made up accounting system".

Under ASC 606 you can't just allocate any old number you like. On top of this, no auditor would sign off on what you suggested. The IRS would be looking at you and get you on tax fraud, you'd be committing securities fraud, bank fraud, wire fraud and 26 other things I can't think of.

Yeah, I agree. If all transactions are reported and treated like a sale.

I just have personal experience where the person offering from one side often wants to avoid the tax. In Australia we have 10% GST/VAT. Pay someone and there is 30% payrol tax (even as a sole trader). Then 12% mandatory pension contribution.

So the $5000 website/landscaping turns into 3k cash in hand.

Enticing to avoid this if you can, but I am risk adverse - clients pay me off the back of this. It balances the risk appetite of a business owner who could cut corners, with me sayng not to. If they do, at least I made the risk clear.

But your point is valid and correct. There is nothing wrong with contra deals where it's booked properly.

But they also have 1,000,000 of expenses, at least some of which is probably deductible from income.

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.

There are jurisdictions in the US where businesses owe tax on revenue.

https://en.wikipedia.org/wiki/Gross_receipts_tax

https://en.wikipedia.org/wiki/Business_and_occupation_tax

Not profit taxes, if you made $0 profit. There are other taxes though. Sales and use taxes. Gross receipts taxes some places. Stuff like that, yes, you pay taxes.