Under Mn state law sales tax extends to 'barter transactions'

As does income. She "sold" the steel at FMV. She "received" that FMV as income and reported the sale subject to sales tax and paid the state.

She should do the same if @#12 performed HVAC work for her. If she paid in steel, the FMV of the services and payment would be reported as income to the respective parties.

When they come for you, they will be knee deep into your #hit to make it worthwhile when they escort you to your hanging.

 

As does income. She "sold" the steel at FMV. She "received" that FMV as income and reported the sale subject to sales tax and paid the state.

I may have missed it, but didn't she give the scrap to the people that hauled it away? It's my understanding that HP felt guilty that they 'worked' so hard for nothing, other than the big bucks the haulers got when they scrapped it. Why would/should she have to pay any tax on something she 'gave away'? Do people need to pay tax now on their garbage when it is hauled to the dump? But I'm sure you'll point out my ignorance in this confusing tax transaction, you being our tax expert and all.

 

Under Mn state law sales tax extends to 'barter transactions' hence my stipulation that the value of services rendered me (via removal of the steel) equaled the scrap value of same (which being the maximum tenderable stipulation of 'taxable worth' in said case)... Hence my liability (as a seller) ≈ $1500 following each jurisdiction's 'take'...

@#12 I was aware that Florida does not impose personal income tax -- Am I to understand that you are 'sales tax free' as well? -- Seems I'm the one who should be envious! --But then I suppose a it's little enough compensation for living in a rather large sauna!

Very best regards
HP

Under Mn sales tax, it would seem that the State would require that I report the name and address of every person who threw an empty can out his car window so he can be properly taxed. No wonder you rue the Nanny State. You didn't sell anything and you didn't get paid!!! (And yes, My computer has been on for 18 minutes, and I already have a dictionary open in another Tab.) In a perverse sort of Internet way, I feel a connection to the ladies near the Canadian border, but I'll be dogged if I can understand how you think! And, take it as a complaint or a compliment, you are the only two I have never got my psychological sights on. Probably pursuant to my documented failure to understand female humans. Both of you are obviously brilliant, so I can't just write you off as, "feather headed ding-a-lings", but reconciling that with some other aspects has been fruitless for me.

The sales tax is 7% in Florida.
I assume you know that Sales Tax is the most regressive of all taxes, burdening those who sell roadside trash at the same rate as those who give away tens of thousands of dollars worth of semiprecious metals.

ps, the sauna is in its full glory right now.
Must prepare for my weekly acclimation treatment.

 

Actually, he lives in a panhandle

False. I live in the middle, left of Florida, in a metropolitan area vaguely 100 miles north to south and 70 miles east to west, containing 3.5 million people.
You can compare my neighborhood to San Diego to Los Angeles to somewhere north of there, including the ocean to the west.
The mystery to me is why evaporating sweat in Southern California approaches the human threshold of pain and evaporating sweat in West Central Florida approaches "ineffective".

 

The mystery to me is why evaporating sweat in Southern California approaches the human threshold of pain and evaporating sweat in West Central Florida approaches "ineffective".

Interesting question... beats me... and you're the thermodynamics expert! If I were to guess, I'd say that it's because the air in Southern California is drier than that of WC Florida.

 

As does income.

Correct! Inasmuch as I 'stipulated' that the 'price' of the steel (paid via the salvage operators' removal of same) equaled said material's salvage value, said figure was documented as income on my state and federal income tax returns - My accountant assured me that the transaction incurred no capital gains liability - howbeit I'm uncertain as to whether such owed to an 'exemption' or perhaps there was no increase in scrap value during my ownership of the metal --- Arrgh! Bureaucracy! - That's why I employ accountants!

She "sold" the steel at FMV. She "received" that FMV as income and reported the sale subject to sales tax and paid the state.

Many thanks!!! -- It's nice to know someone gets it!

didn't she give the scrap to the people that hauled it away?

Not quite! I sold the steel for it's scrap value (Ca $20k) which the salvage operators paid for via their labor in removing same! -- Note that the phrase: 'anything of value' apparent in tax (and other legal) code includes the value of services rendered!

Stated otherwise - they provided a $20K service (i.e. removal of the scrap) for which they were paid via the $20k scrap value vested in the steel they collected -- Get it?

It's my understanding that HP felt guilty that they 'worked' so hard for nothing, other than the big bucks the haulers got when they scrapped it.

Correct! $20k was shamefully derisory compensation for the incredible amount of difficult, hazardous labour preformed on my behalf -- That said, it was their choice...

Why would/should she have to pay any tax on something she 'gave away'?

Because the scrap value was payment for services rendered... IOW I didn't "give it away" they earned it via cutting, loading and hauling of same...

But I'm sure you'll point out my ignorance in this confusing tax transaction

Where's that coming from? There's certainly nothing personal in this - come to that, it seems very few people understand tax regulations as regards barter -- Moreover I'm no expert! I leave that to accountants - I merely advise them to declare everything and claim no deductions -- hence securing my assurance of 'snag free' audits, etc...

Very best regards
HP

 

When they come for you, they will be knee deep into your #hit to make it worthwhile when they escort you to your hanging.

You get a, "like" for that in spite of the fact that I disagree with you.
1) They will be nostril deep in my s**t.
2) For the other disagreement, see post #1065.
If I did HVAC work, at no charge, for a recently unemployed home owner, the State would want taxes on...what?
The FMV of the job, from both of us, just as the State wants taxes paid on the FMV from both the litterer and the destitute person who picked up the litter, and the scrap metal recycler that bought the empty cans, and the smelter he sold the cans to, and the manufacturer who bought the aluminum, and the workers who turned the aluminum into car wheels, and the people who purchased those wheels, and the Dealership who sold those wheels, and the scrap metal recycler who crushed that car...ad infinitum. (Darn, I wish my spell checker spoke Latin. It does cuss words pretty well, but it has no clue about other Earth languages.)

Stated otherwise - they provided a $20K service (i.e. removal of the scrap) for which they were paid via the $20k scrap value vested in the steel they collected -- Get it?

I could live well on jobs like that.
Except for the fact that HP lost the entire FMV of the metal and owes taxes on said loss.
This resembles the idea that if you own gold, or some other metal, you owe taxes when inflation changes the currency value of the metal, but you don't get a refund when the fluctuations of FMV price reduce the currency value of the metals.

I'd say that it's because the air in Southern California is drier than that of WC Florida.

That's obvious. Now figure why both places are east of a huge body of salt water, in the same hemisphere, with the prevailing current going south, the prevailing winds going east, and the humidity is so different. ps, that's Meteorology, not Thermodynamics. Larger scale of thinking.

declare everything and claim no deductions -- hence securing my assurance of 'snag free' audits,

Right. My mother had those, "snag free audits". She received a check for over-paid taxes for 7 years in a row. Then she threatened to sue the IRS for completely unfounded harassment because the accountant cost more than the refund.. Talk about, "nostril deep in your #hit"!

 

You didn't sell anything and you didn't get paid!!!

But I did! - I sold scrap for which I was paid in labour (as opposed to funds)!

I assume you know that Sales Tax is the most regressive of all taxes, burdening those who sell roadside trash at the same rate as those who give away tens of thousands of dollars worth of semiprecious metals.

I hear that! -- But then life is far to short to sweat taxes -- Best just to pay and move on

OBTW if it's worth less than $30 per ounce -- t'aint semiprecious -- merely 'recyclable' junk

The mystery to me is why evaporating sweat in Southern California approaches the human threshold of pain and evaporating sweat in West Central Florida approaches "ineffective".

Well... Evaporation is 'slower' with increasing humidity! -- Hence it would seem a mere matter of fewer joules absorbed per time unit (in the humid environment) -- but then you know that

Very best regards
HP

 

Except for the fact that HP lost the entire FMV of the metal

Grrrrr! I did not! It covered the expense of removal of the stainless tankers!!!
@#12 would you like it better had they first paid me cash for the scrap such that I might pay it back to them in exchange for their removal of same

That's obvious.

Told ya!

but then you know that

Best regards
HP

 

Now figure why both places are east of a huge body of salt water,

Yebutt... (is that how that's spelled? ) isn't Florida both at east and west of a huge body of salt water?

 

I may have missed it, but didn't she give the scrap to the people that hauled it away?

Did you miss the part where it was a bartered agreement?

But I'm sure you'll point out my ignorance in this confusing tax transaction, you being our tax expert and all.

No, you did a fine job of that yourself.

 

If I did HVAC work, at no charge, for a recently unemployed home owner, the State would want taxes on...what?

If you bartered an agreement, where both received something for services rendered, both should claim the income. Since you didn't state so in your writings, you did charitable work as you received no benefits from the services rendered. Look in IRS Pub 17. It's not my rules. Hell, if you and HP had a bartered agreement, the IRS taxes all income. It makes no exceptions. Bartering is income to both.

I'm sure there are those who don't claim door prizes and such, well, those that don't get a 1099 Misc from the source as the IRS also gets a copy.

I'm not the tax police. There are reasons why people have accountants. Canadians have some unique forms as well. I had an opportunity to review them once to help someone.

 

But I did! - I sold scrap for which I was paid in labour

That's the part I don't believe.

If refined metals cost as much to be loaded and transported as they cost to create, they would be priced by the mile and gold from California would never arrive at Ft. Knox.

If I moved out of my home and let some homeless family move in for free, would I owe taxes on the money they didn't pay me and they owe taxes on the FMV of a rental price? What if I merely rented out my home. I have to mark that as income, but do the renters owe taxes on the FMV of the use of the house? That reminds me of a line from a movie about, Kidco which mixed straw and poop to make compost. "They're taxing us at both ends of the horse!"

Getting serious again...
I see have seen scrap metal operations in Florida for 35 years, and nobody hands over the metal for free and gets paid for transporting it. The Highway Department does not pay people who collect trash by the roadside. Demolition companies do not pay people to strip the metals out of the deceased buildings, they charge them for the privilege of taking the metals. People here scour the alleys looking for dead appliances and discarded bicycles. If the price of transportation was worth as much as the metal, nobody would do that because there is no profit in it. But in Minnesota, people pay to have scrap metal hauled away.

"Knock knock. Hello Mister homeowner. I see you junked a dead microwave oven. Will you pay me to haul your trash and sign this 1099 form to pay taxes on my labor?" What's that? You already pay a Waste Management corporation to haul your trash and don't pay taxes on the labor?"
"No, this is Minnesota. I pay a Waste Management corporation to haul my trash and I pay taxes for the labour value by filing a 1099 form each year."

Do you actually do that? How about paying income taxes on the price you pay for municipal sewage treatment?

If you want to pretend you paid those people to load, transport, and sell the metal, which scrap price paid all the labor costs and left a hefty profit for the contractor, I'm thinking bad things about you. Or you could believe your accountant (Post#1068). After all, that's what you pay an accountant for...to know more about taxes than you do.

You aren't going to move me off my practical experience and I'm not going to move you off your fantasy about labor and transportation being worth the price of scrap metal. I guess we will just have to agree to disagree.

isn't Florida both at east and west of a huge body of salt water?

I tire of your jousting, Mr. Quixote. Please think of a valid theory or get thee behind me.
(Two book references in two sentences! HP is rubbing off on me.)

Here's a theory: The water temperature west of California is 59F. This site claims 54.4F as the human threshold of pain in the cold direction.
http://biology-pages.info/P/Pain.html

The water temperature west of me is 88F. If you track that down a comfort scale, you have to get to 80F dry bulb temperature to get to the edge of, "comfort". Obviously, it must have started raining 8 degrees ago, therefore, there is no dewpoint of 88F that is comfortable.

Actually, the highest enthalpy dewpoint that is on the "comfort" scale is 76F at 78 dry bulb.

 

"Knock knock. Hello Mister homeowner. I see you junked a dead microwave oven. Will you pay me to haul your trash and sign this 1099 form to pay taxes on my labor?" What's that? You already pay a Waste Management corporation to haul your trash and don't pay taxes on the labor?"
"No, this is Minnesota. I pay a Waste Management corporation to haul my trash and I pay taxes for the labour value by filing a 1099 form each year.

@#12, I've come to the realization that you and I must be 'brothers from different mothers'. We also live in the "real world" not in some 'fantasy world', of always doing things by the "book", what ever that book is. That 'fantasy world' seems to have people looking over their shoulders at everything they do. Is it because they are afraid that a misstep will uncover the lager unlawful things that are done? Only the Shadow knows.

 

Where's that coming from? There's certainly nothing personal in this

That's coming from the fact that no matter what I say anywhere on this forum, JJ calls me ignorant, either outright or in so many words. So, due to this, I do it preemptively when I answer a post from him.

Grrrrr! I did not! It covered the expense of removal of the stainless tankers!!!
@#12 would you like it better had they first paid me cash for the scrap such that I might pay it back to them in exchange for their removal of same

If you were living in a real world situation, at least in my real world of struggling and working in industry, a scrap metal dealer would be contacted and would come in and pay you for the metal. Metal of that magnitude and value is bought. Then you would have to pay taxes on the money paid by the scrap yard. This whole 'barter' thing is not how real world people do things.

I'm beginning to see where BR-549 gets his ideas about "academics".

 

If refined metals cost as much to be loaded and transported as they cost to create, they would be priced by the mile and gold from California would never arrive at Ft. Knox.

Transportation was the least of it -- By way of relating the amount of labor involved please note that the steel was in the form of 'Juggernaut' tanker trailers -- following cutting and loading it was hauled away via a single F-450 (many 'trips')!
Stated otherwise: I (and, I believe, most of us) regularly pay more for much less work -- why should salvage operators be under-compensated? -- Clearly, I was the recipient of the 'better end' of the bargain!

moved out of my home and let some homeless family move in for free, would I owe taxes on the money they didn't pay me and they owe taxes on the FMV of a rental price?

As I understand the tax code, no. Taxation applies to receipt or sale of goods and/or services assessable in terms of monetary value... (i.e. the monetary value of the scrap ≈ $20k whereas the monetary value of zero rental fee = $0) --- That said, you'd yet be responsible for any applicable property taxes, etc...

What if I merely rented out my home. I have to mark that as income, but do the renters owe taxes on the FMV of the use of the house?

AFAIK That depends upon local sales tax codes...

That reminds me of a line from a movie about, Kidco which mixed straw and poop to make compost. "They're taxing us at both ends of the horse!"

Agreed! -- Such is the nature of VAT/Sales taxation -- That said, IMO, life is far too short to admit of 'fighting City Hall' or, indeed, Washington -- IMNSHO The cost of expediency ('capitulation', if you insist) in terms of personal pride and petty cash is more than compensated by the freedom to get on with one's life afforded thereby!

I see have seen scrap metal operations in Florida for 35 years, and nobody hands over the metal for free and gets paid for transporting it.

Once again, are you suggesting I should have insisted upon remittance of the scrap value 'up front' only to pay it back upon completion of the job? --- Please note: I did not deliver the scrap! Hence nothing was 'given' away!

"No, this is Minnesota. I pay a Waste Management corporation to haul my trash and I pay taxes for the labour value by filing a 1099 form each year."

Do you actually do that? How about paying income taxes on the price you pay for municipal sewage treatment?

I daresay said taxes are 'built into' the applicable disposal fee schedules -- in all states/territories -- Hey @#12? Seriously - it is not my intent to defend the tax code -- but, rather, to point out the fact that, far from receiving a 'free gift', the salvage operators paid dearly for that scrap!

If you want to pretend you paid those people to load, transport, and sell the metal, which scrap price paid all the labor costs and left a hefty profit for the contractor, I'm thinking bad things about you.

@#12 What can I say? I payed fully twelve times that amount for installation of a 1 MW electrical substation - and I don't even own the equipment (hence the entire fee [≈ $250k] was down to labour alone) -- Lemme tell ya, based upon first-hand observation, said installation was much less labor-intensive than the scrap removal! -- Hence the salvage operators were paid significantly less than the poco's 'construction crew' - do you hold that to be equitable? (I know I don't)...

---Disclaimer-- I am NOT an advocate of 'comparable worth' legislation! (Discussion of which constitutes another thread)...

So... 'bout all I can say is if you don't think complete, clean removal of 24 tons of junk in ten day's time is worth more than $20k - then, IMHO, you're 'out of touch' -- But I promise I harbour no 'bad thoughts' toward you whatever!

I guess we will just have to agree to disagree.

Fair enough -- but with the qualification that, as always, I'm maintaining an open mind...

Best regards
HP

PS
For the benefit of interested parties, a description of the not inconsiderable work in question may be found HERE

 

That 'fantasy world' seems to have people looking over their shoulders at everything they do. Is it because they are afraid that a misstep will uncover the lager unlawful things that are done?

Not at all! -- Merely recognition of the reality that breaking the rules (unjust 'tho some may be) carries very real consequences! -- Compliance is cheap, easy and stress-free - it just doesn't get any better than that!

If you were living in a real world situation, at least in my real world

I daresay 'my world' is as real as 'your world'...

a scrap metal dealer would be contacted and would come in and pay you for the metal. Metal of that magnitude and value is bought.

Perhaps you ignore the magnitude of the labor involved in removal of the steel?

This whole 'barter' thing is not how real world people do things.

@shortbus - with sincere respect, invocation of 'identity politics' nonsense is uncalled for! My world is every bit as real as yours! -- Further to this -if I might presume to 'read between the lines'- it seems the real problem here is my insistence upon paying taxes attending transactions others might choose to 'duck'? -- Please rest assured that I'm anything but a 'goody two shoes' -- 'tis merely that I have no desire to court the 'wrath' of 'the powers that be' -in any event- but especially over pennies and nickles! -- Again, compliance is painless and life is short - hence the 'clear path forward' is obvious!

With sincere respect and very best regards
HP

PS to all participants on this thread -- PLEASE! -- Let's take care Re: discussion of the tax code lest same 'segues' to political debate!!!

 

it seems the real problem here is my insistence upon paying taxes attending transactions others might choose to 'duck'?

No, the real problem is your insistence on paying taxes your accountant told you do not exist.

 

Here's what Publication 17 for the Tax Year 2016 stated:

Bartering

Bartering is an exchange of property or serv-ices. You must include in your income, at the time received, the fair market value of property or services you receive in bartering. If you ex-change services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as fair market value unless the value can be shown to be otherwise.Generally, you report this income on Sched-ule C (Form 1040), Profit or Loss From Busi-ness, or Schedule C-EZ (Form 1040), Net Profit From Business. However, if the barter involves an exchange of something other than services, such as in Example 3 below, you may have to use another form or schedule instead.

Example 1. You’re a self-employed attorney who performs legal services for a client, a small corporation. The corporation gives you shares of its stock as payment for your serv-ices. You must include the fair market value of the shares in your income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) in the year you receive them.

Example 2. You’re self-employed and a member of a barter club. The club uses “credit units” as a means of exchange. It adds credit units to your account for goods or services you provide to members, which you can use to pur-chase goods or services offered by other mem-bers of the barter club. The club subtracts credit units from your account when you receive goods or services from other members. You must include in your income the value of the credit units that are added to your account, even though you may not actually receive goods or services from other members until a later tax year.

Example 3. You own a small apartment building. In return for 6 months rent-free use of an apartment, an artist gives you a work of art she created. You must report as rental income on Schedule E (Form 1040), Supplemental In-come and Loss, the fair market value of the art-work, and the artist must report as income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) the fair rental value of the apart-ment.Form 1099B from barter exchange.

If you exchanged property or services through a bar-ter exchange, Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or a similar statement from the barter exchange should be sent to you by February 15, 2017. It should show the value of cash, property, serv-ices, credits, or scrip you received from ex-changes during 2016. The IRS also will receive a copy of Form 1099-B.

I know HP is north of the U.S. and I'd bet her government states something very similar.

 

No, the real problem is your insistence on paying taxes your accountant told you do not exist.

There seems to be some misunderstanding? As per accounts said transaction most definitely incurred both sales and income tax liability -- but no capital gains liability the latter of which I certainly did not insist upon paying!

My accountant assured me that the transaction incurred no capital gains liability

I apologize for my apparent lack of clarity

Very best regards
HP