Wednesday, June 14, 2006
Thomas Zupanc sent in a wonderful item about the tax consequences of Kyle MacDonald's quest to barter his way from one red paperclip to a house:
My name is Kyle MacDonald and I am trying to trade one red paperclip for a house. I started with one red paperclip on July 12th, 2005 and I am making a series of trades for bigger or better things. My current item up for trade is one role in a movie.
He has made 13 exchanges thus far, all chronicled on his blog. The exchanges include an afternoon with Alice Cooper and a role in Corbin Bernsen's new movie. If MacDonald were subject to U.S. tax (he is a Canadian), wouldn't each exchange generate short-term capital gain, since the swaps do not appear to qualify for § 1031 like-kind exchange treatment? Wouldn't this be simple barter income? Would McDonald be subject to the barter exchange reporting rules? Comments are open.