| ▲ | bryanlarsen 4 hours ago |
| > 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 you have $X in revenue implies you won that revenue by merit. |
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| ▲ | scarby2 3 hours ago | parent | next [-] |
| This isn't a good take. > If you do the work but undervalue it, it's likely tax fraud. 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. > you do the work but overvalue it, it's likely investor fraud. Quite possibly. Assuming this was done with the intention of misrepresenting your revenue and gaining investment. >The vendor may have been chosen not by merit, but by its willingness to accept an exchange of services. Saying you have $X in revenue implies you won that revenue by merit. Vendors are chosen all the time because of their willingness to accept specific payment terms and a whole bunch of non-merit pipelines via family, via golf course deals etc. |
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| ▲ | elil17 2 hours ago | parent | next [-] | | > 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. | | |
| ▲ | andix 41 minutes ago | parent [-] | | 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. | | |
| ▲ | thih9 20 minutes ago | parent [-] | | 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. | | |
| ▲ | tstenner 2 minutes ago | parent [-] | | If the expense is tax deductable, it mostly doesn't matter whether you have $10 earnings vs $10 business expenses or $10K. |
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| ▲ | stymaar an hour ago | parent | prev | next [-] | | > 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. | |
| ▲ | cortesoft 2 hours ago | parent | prev | next [-] | | > 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. | |
| ▲ | cjbgkagh 2 hours ago | parent | prev | next [-] | | 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. | | |
| ▲ | philipallstar 2 hours ago | parent [-] | | Okay but then why are we singling this out as tax fraud, if the justification is just "anything can be"? Why not claim that posting on HN is tax fraud? | | |
| ▲ | cjbgkagh 2 hours ago | parent [-] | | Barter counts as income by many tax jurisdictions, if you don’t declare the fair market value of the exchange you are in violation. Most people don’t declare this and it is rarely ever enforced. |
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| ▲ | bloppe 3 hours ago | parent | prev | next [-] | | > 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? | | |
| ▲ | scarby2 2 hours ago | parent [-] | | On a corporate level it doesn't really matter as you're only taxed on your profits/losses. If we do a service swap ultimately it's just adding a revenue item with a matching loss, and these are infact quantified. As an individual interestingly it does matter because services received for free are considered taxable income (but businesses are not taxed on their income). | | |
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| ▲ | nitwit005 43 minutes ago | parent | prev | next [-] | | [dead] | |
| ▲ | nine_k an hour ago | parent | prev [-] | | [dead] |
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| ▲ | andix an hour ago | parent | prev | next [-] |
| > 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 mainly used to inflate sales figures and scam investors, then probably yes. If it's just a "good deal" then probably not. |
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| ▲ | thih9 30 minutes ago | parent [-] | | > 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”. |
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| ▲ | brandensilva an hour ago | parent | prev | next [-] |
| If that is fraud then company evaluations are fraud too. Case in point SpaceX and it's smorgasbord of other companies rolled into it to save them. Who protects the consumer when they have been gutted of any power? |
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| ▲ | hapless an hour ago | parent [-] | | 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 |
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| ▲ | mannanj 3 hours ago | parent | prev | next [-] |
| And who chooses how to value unique, innovative and visionary work? |
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| ▲ | retr0rocket 3 hours ago | parent | prev [-] |
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