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Swizec 11 hours ago [-]
Services in kind is a pretty common business practice. You see this a lot at the SMB level especially outside of the US.
Small businesses are cash strapped. So you find someone who needs your services and you need their services. Instead of exchanging cash, you exchange invoices and do the work. You build them, say, a $5000 website, they perform, say, $5000 of landscaping.
At big boy levels this is often structured as “strategic partnership”.
The part that makes it not fraud is that both parties do actually do the work.
bryanlarsen 10 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.
scarby2 9 hours ago [-]
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.
elil17 8 hours ago [-]
> 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 7 hours ago [-]
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.
Flundstrom2 6 hours ago [-]
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.
andix 6 hours ago [-]
> on the sole purpose of avoiding tax or grooming the pig
Exactly. But it doesn't have to be used in this way.
thih9 7 hours ago [-]
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 6 hours ago [-]
If the expense is tax deductable, it mostly doesn't matter whether you have $10 earnings vs $10 business expenses or $10K.
4 hours ago [-]
thih9 4 hours ago [-]
Good luck explaining that to the IRS.
gamblor956 1 hours ago [-]
The IRS would be fine worth it if taxable income is unchanged.
Businesses are taxed on their net income, not get gross.
stymaar 8 hours ago [-]
> 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 9 hours ago [-]
> 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 9 hours ago [-]
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 8 hours ago [-]
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 8 hours ago [-]
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.
gamblor956 1 hours ago [-]
Tax fraud is treated the same as other crimes and is subject to the same evidentiary threshold.
cjbgkagh 27 minutes ago [-]
It depends on jurisdiction, the US is unusual, most countries they’ll reassess you and it’s on you to prove them wrong.
I did have to look it up, I didn’t know that the US was different in this way. I did have California tax authority make a mistake and take money directly out of my account and there didn’t appear to be a way to fight it. It wasn’t enough to be worth hiring a lawyer over so I let it go but it didn’t give me much faith in the governance of California, very Kafkaesque.
bloppe 9 hours ago [-]
> 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 8 hours ago [-]
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).
danielmarkbruce 5 hours ago [-]
You are just making stuff up, this isn't remotely close to how tax law works.
gamblor956 1 hours ago [-]
The first paragraph is generally correct. The second is not.
Business are taxed on their net income but many jurisdictions tax businesses on their gross revenue as well (look up GRT and GET).
kube-system 7 hours ago [-]
There are corporate taxes on revenue in some situations
danielmarkbruce 5 hours ago [-]
This is pure nonsense. In the US the internal revenue code doesn't allow you to just value services however you choose in what is effectively a barter arrangement.
nine_k 8 hours ago [-]
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nitwit005 7 hours ago [-]
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andix 7 hours ago [-]
> 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.
thih9 7 hours ago [-]
> 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”.
andix 6 hours ago [-]
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.
3 hours ago [-]
brandensilva 8 hours ago [-]
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?
hapless 7 hours ago [-]
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
cyberge99 2 hours ago [-]
They didn’t. Musk had to pay a 1.5MM fine.
mannanj 9 hours ago [-]
And who chooses how to value unique, innovative and visionary work?
singleshot_ 7 hours ago [-]
Article 1 judges in US Tax Court?
bryanlarsen 6 hours ago [-]
And the judges are likely to be looking for good faith as much or more than technical accuracy in the valuation. So the IRS is not going to bring you in front of the tax judge unless they have evidence of bad faith.
OTOH, most work is not "unique, innovative and visionary" and has a relatively transparent fair market value.
c7b 5 hours ago [-]
Re taxes: Barter exchanges are considered taxable revenue by the IRS and must be reported on a 1099-B form. [0]
Any lie, misleading omission or misleading half-truth is investor fraud.
retr0rocket 10 hours ago [-]
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atomicnumber3 11 hours ago [-]
This feels very adjacent to the story about the whole town in debt, and the rich guy leaves a $100 bill on the table, [and so on], in a way that I can't quite put my finger on.
joenot443 10 hours ago [-]
It's a cool little analogy, one I'd never heard of before
> True, at the beginning each resident has a $100 liability. But each also has an offsetting financial asset of $100. At the end, they all have neither. So the $100 bill acts as a clearing mechanism
throwaway667555 10 hours ago [-]
You can't put your finger on it because money is merely an accumulator and medium of exchange of economic performance. The performance of services in exchange for other services without money is a perfectly valid economic exchange that can and should be booked to revenue of each of the parties, if actually performed.
Loans without any economic performance of services generate circular meaningless cash flows yeah, but that's not the case when services are actually performed.
Loans are promises to pay. Business deals are promises to perform services or deliver goods. The difference is easily lost in the details even for accountants and economists.
copperx 10 hours ago [-]
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.
throwaway667555 8 hours ago [-]
When comparing promises between businesses to pay versus promises between businesses to perform services, it is irrelevant that fiat currency is a federal reserve note rather than, say, bottle caps. Irrelevant.
adharmad 10 hours ago [-]
The man who saved Pumplesdrop
By W. J. Turner
hirsin 9 hours ago [-]
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.
Fordec 10 hours ago [-]
Doesn't feel very far off from the money circularly trading hands between Nvidia, Oracle, OpenAI etc.
jona-f 9 hours ago [-]
Yeah, just a few hundred billion dollars, basically the same...
osullip 9 hours ago [-]
In Australia these kind of deals are treated like income.
I am sure people avoid the tax element this way, but it's not a sustainable way to go.
Let's say I do a website for $5,000 (putting aside that this a dead industry, and my career for the past 20 years) and the landscaper comes to do the work at my house.
If he cuts a powerline, falls down a hole or chops off his hand, we have a big insurance problem. No paperwork, no contract.
I have had friends who did their side of the contra deal and never got the other part of the bargain fulfilled.
Things like 'I'll paint your house if you can help fix up this old car of mine.'
I have turned down these deals in the past. Same as someone asking me to work for free for 'exposure'.
I am not having a go at the comment above as I think the point is valid - small business doing this is fraud, big business do it and it's fine.
Just my advice to anyone thinking it might work for them. Send the invoice, do the work, get paid in money.
RobotToaster 9 hours ago [-]
I think the fact that it's treated as income is the point.
My company builds your company a website, and "charge" $1,000,000 for it.
Your company mows my company's lawn and "charge" $1,000,000 for it.
Both companies now have $1,000,000 in revenue from this transaction.
danielmarkbruce 7 hours ago [-]
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 likely be committing securities fraud, bank fraud, wire fraud and 26 other things I can't think of, assuming you are a business of any size at all.
mattnewton 8 hours ago [-]
But they also have 1,000,000 of expenses, at least some of which is probably deductible from income.
osullip 9 hours ago [-]
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.
singleshot_ 7 hours ago [-]
> No paperwork, no contract.
Two adults, a legal subject, sufficiently specified, offer, acceptance, consideration, mutual assent… a contract.
9 hours ago [-]
BobbyTables2 2 hours ago [-]
Wouldn’t they still pay taxes on the trade?
Yeah, they’re getting useful things but they aren’t making money.
skeeter2020 11 hours ago [-]
the last thing you should do in this scenario is book that as revenue. Of course I would never do this, but you could keep it off the books.
ebiester 10 hours ago [-]
It depends if your goal is to sell the company or evade taxes, of course.
Aurornis 10 hours ago [-]
The key realization is that it increases expenses at an equal rate as the revenue increase.
You get $5000 of revenue but spent $5000 on services.
You also have to pay taxes on that $5000 like other revenue.
So many small businesses will try to just exchange the services more directly in some way, or give steep discounts. (Tip: This doesn’t mean it’s entirely correct for tax/legal/accounting purposes, so don’t do big deals like this without consulting professionals. I’m just saying this is what’s done by some people)
> The part that makes it not fraud is that both parties do actually do the work.
The cheap criticisms of these deals always miss this part: something of value is traded for the dollars by both parties. Companies can’t simply circulate dollars between themselves.
ahtihn 10 hours ago [-]
> You also have to pay taxes on that $5000 like other revenue.
Businesses do not pay taxes on revenue, they pay taxes on profit.
Other taxes may be applicable though (such as VAT or sales taxes).
bombcar 10 hours ago [-]
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.
gizmo686 10 hours ago [-]
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.
bombcar 7 hours ago [-]
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).
lotsofpulp 10 hours ago [-]
There are jurisdictions in the US where businesses owe tax on revenue.
> You also have to pay taxes on that $5000 like other revenue.
What taxes are owed on revenue? Tou pay taxes on profit only.
glitchc 8 hours ago [-]
Tax laws may vary by jurisdiction. Often the in-kind contributions appear on a different line item from income on the balance sheet and usually go into a different box on the tax form.
oliver236 10 hours ago [-]
and you dont need to pay taxes? how does that work
f6v 9 hours ago [-]
You net zero if you pay $1 and make $1.
xp84 9 hours ago [-]
Of course you have to pay taxes!
cestith 8 hours ago [-]
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.
TZubiri 9 hours ago [-]
And the part that would make it fraud (in some contexts, especially publicly traded and international corp struturing for tax purposes) would be overvaluing the services.
"This is a parody website. Any resemblance to real companies wash-trading their revenue is purely coincidental and also definitely happening."
outside1234 10 hours ago [-]
"Any comparison to OpenAI is totally valid"
orthecreedence 9 hours ago [-]
> "Closed a $40M Series B in 11 days. Have not spoken to a customer since 2022."
That gave me a chuckle. Too real.
jwr 12 hours ago [-]
I find this amusing: I'm from Poland, where after the VAT tax was introduced in the 1990s, there were famous "VAT carousel" crimes, with people ending up in prison. The basic idea was similar, except you also collected VAT refunds from the state.
If you search for "vat carousel" today, it seems this is still a thing.
gaiagraphia 11 hours ago [-]
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 modern world where most transactions are digital, is this a great use of resources?
derriz 9 hours ago [-]
VAT is trivial for businesses to deal with. You add x% onto every invoice you issue. The VAT due to be paid to the government is a simple sum of the amounts distinctly shown on each invoice you issue minus the sum of the VAT amounts on invoices you’ve paid. Income/employment taxes, corporate tax, import taxes, etc are orders of magnitudes more complex, dynamic and subject to legal interpretation. I was a small business owner for a while years ago and did the VAT myself. But there was no way I would even attempt employment or corporation taxes - covered by endless legislation and changing every year - that was a job for the accountant.
stephen_cagle 9 hours ago [-]
I've multiple times done a minor dive into why a VAT tax is seen as a reasonable tax? It... seems as regressive as a sales tax with even more layers of intervention? I've always eventually lost interest in trying to make sense of it, but they sure seem popular in Europe so there must be something to them?
My current belief is that there should really just be a wealth tax on assets (Federal) and a land value tax on land (States); nothing else.
Arodex 6 hours ago [-]
It is a progressive tax. It is purely neutral when considered as a sales tax (same percentage, whether you buy a cheap loaf of bread or a luxury gizmo), regressive as a share of income when you consider the poor expend more of their revenue into daily expenditures (whereas the rich put a greater proportion into savings), but back to neutral when you consider savings are meant to be used one day anyway, and slightly progressive in countries where VAT is lower for food and other vital daily expenditures.
There used to be a wealth tax and land value tax in Sweden (aka world champion of taxation), but they were abolished simply because being taxed yearly on an fixed asset doesn't mean you have the liquidity to pay the taxes from your income. They had also caused the some of the wealthiest people in the UK to be Swedes, IKEA being Swiss and Dutch, and a lot of other movements of capital to other countries. All in all, wealth and value tax are a big loss of income for the government.
shimman 9 hours ago [-]
Good thing we don't cater society to your beliefs, else it would lead to collapse of the welfare state and cause the needless deaths of tens of millions of Americans.
ww520 10 hours ago [-]
VAT is a regressive tax. It hits everyone along the way, rich or poor. It hits the poor especially hard proportionally.
I first hear about this from a guy running a warehouse. He noticed the same boxes commining in again and again.
hliyan 12 hours ago [-]
The best bit of tongue-in-cheek is in the FAQ:
> We take 2% of every swap. Then we swap our revenue with another platform.
RobotToaster 11 hours ago [-]
Anyone else getting "SSL_ERROR_NO_CYPHER_OVERLAP"
0xffany 11 hours ago [-]
Visiting the website's url (revswap.ai without www) redirects me to revai.com which is for sale on godaddy...
Fastest enshittification ever?
RobotToaster 9 hours ago [-]
Maybe the IRS didn't get like the joke?
Kim_Bruning 11 hours ago [-]
Confirmed. Firefox and Chrome.
cactusplant7374 8 hours ago [-]
Has anyone here actually viewed the page? Seems strange that it got upvoted if no one can view the page.
1attice 11 hours ago [-]
Yes. :/ GrapheneOS over here
RobotToaster 11 hours ago [-]
I'm on firefox on windows.
clearstack 11 hours ago [-]
SEC calls this round-tripping. ASC 606 requires commercial substance — if both parties just book offsetting transactions, auditors flag the net cash flow as zero
RobotToaster 11 hours ago [-]
What if they buy each other's NFTs instead?
whatever1 11 hours ago [-]
offsetting in what horizon? I give you 100 in q4 2026 you give me 100 in q1 2027
skeeter2020 11 hours ago [-]
They're already ahead of you; you have to consistently book revenue (accrual or cash basis) which means they both go at the same time (which would offset) or that real money is being exchanged. You can't accrue the 100 you're (supposedly) giving me now and THEN accrue the 100 I'm giving you next year.
bandrami 10 hours ago [-]
You could but the other guy would have to book 100 of goodwill in the interim, matched by me booking goodwill later, and that brings it's own problems
duzer65657 10 hours ago [-]
Goodwill almost always raises concern with authorities and audits, so I'd imagine so sort of quid pro quo version is equivalent to loudly yelling to be audited!
Frozen_Flame 11 hours ago [-]
What if instead of trading dollars I want to promise to trade dollars in the future? My investors need to see me capturing the market. Might even create some panic for added fun.
conorcleary 9 hours ago [-]
You'll be the mayor of Foursquare in no time!
david927 11 hours ago [-]
I remember in the couple years before the dot com crash in 2000, there was a lot of satire being written which was being taken very seriously. You couldn't tell what was serious and what was humor because both were absurd.
Havoc 11 hours ago [-]
The FAQ is amazing....pre-legal haha
This is why substance over form is a thing in revenue accounting. Unless you're an American AI company ofc.
luke5441 11 hours ago [-]
Let no one have the excuse of "this was so unexpected" once it burns down.
PeterStuer 10 hours ago [-]
It's weird to keep referring to these AI behemoths as "startups".
outside1234 10 hours ago [-]
They have no scalable business model that yields profit outside of raising more investment, so yes, somehow they are still startups
marcosdumay 7 hours ago [-]
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.
mcmcmc 10 hours ago [-]
> They have no scalable business model that yields profit outside of raising more investment
Yeah that doesn’t sound Ponzi-adjacent at all
theartfuldodger 11 hours ago [-]
Never seen that particular SSL error before!
stego-tech 11 hours ago [-]
I don’t see anything topping the internet today better than this. Perfect, no notes.
Do it among a group of companies to make it more legal, yc way
time0ut 9 hours ago [-]
Pre-legal. That is gold.
sscaryterry 11 hours ago [-]
(Pending) Crime-as-a-Service
Lucasoato 12 hours ago [-]
Some of the text can't be read if opened in Firefox with dark mode as default. Kudos to you guys for making it anyway!
frankfrank13 7 hours ago [-]
I interviewed at a startup, really early stage, who claimed to be on track for $100k ARR. We all know "ARR" is bullshit, but I didn't suspect the ~$10k monthly to be bullshit. It turns out this was $10k pre-discount, and this product was ~FREE for YC companies, who made up ~100% of this companies customer base. So revenue was $0, or very close to it.
nottorp 9 hours ago [-]
Interesting. It's probably a parody website as the comments say.
But wtf is up with Firefox? It doesn't like the site's SSL. Okay, they missed points 7, 18 and 24 to 31 in the current security theater checklist.
An error occurred during a connection to revswap.ai. Cannot communicate securely with peer: no common encryption algorithm(s).
Error code: SSL_ERROR_NO_CYPHER_OVERLAP
Whatever?
Hmm if i edit the link to http i get a cloudflare error page. Someone censoring?
And what does it say about the modern internet that the first two things i thought of are security theater and vendor censorship?
rizza 11 hours ago [-]
This took me far too long to figure out that it was parody. I'm sure some VC has at least thought of building a SEC Violations as a Service platform. This is truly the dumbest timeline.
randometc 12 hours ago [-]
Obligatory Michael Lewis quote, from Boomerang (2011):
> Yet another hedge fund manager explained Icelandic banking to me this way: you have a dog, and I have a cat. We agree that each is worth a billion dollars. You sell me the dog for a billion, and I sell you the cat for a billion. Now we are no longer pet owners but Icelandic banks, with a billion dollars in new assets.
cucumber3732842 12 hours ago [-]
That's just a variant of this old one:
Two economists are walking through a cow pasture.
The first economist says to the other “I’ll pay you $100 to eat that pile of shit.” The second economist takes the $100 and eats the pile of shit.
They continue walking until they come across a second pile of shit. The second economist turns to the first and says “I’ll pay you $100 to eat that pile of shit.” The first economist takes the $100 and eats a pile of shit.
Walking a little more, the first economist looks at the second and says, "You know, I gave you $100 to eat shit, then you gave me back the same $100 to eat shit. I can't help but feel like we both just ate shit for nothing."
"That's not true", responded the second economist. "We increased the GDP by $200!"
jerf 11 hours ago [-]
Except the GP quote actually happens.
For example, if you've ever wondered why useless art trades at such eye-watering valuations, the answer is that the high valuations are fictions that governments will accept for tax purposes, from which you can derive a variety of exciting tax consequences: https://naturalist.gallery/blogs/journal/understanding-the-f... more-or-less because they agree among themselves what the art is valuated at for their own benefit.
lesuorac 11 hours ago [-]
Well while the pile of shit makes it a joke, isn't there a real advantage here of legibility?
Like you have a measure (GDP) and it can't accurate measure things unless a sale occurs. So even if the money is a wash there was an actual activity occurring in the economy and now it's recorded.
lotsofpulp 10 hours ago [-]
That scenario does not work for this discussion because the first economist has no reason to expect the second economist will ask him to eat shit for $100.
debarshri 11 hours ago [-]
What are the types of ARR the platform support?
Can it also generate SOC2 certifications in days?
random3 11 hours ago [-]
They gotta become a platform, so likely more will come
janderson215 11 hours ago [-]
I heard they started a hardware unit operating in stealth, but the rumor is they’re working on a box.
felooboolooomba 9 hours ago [-]
Wouldn't "cookthebooks.ai" be a better name?
baggachipz 11 hours ago [-]
Is there a way we can leverage the Gig Economy to book large gains?
whatever1 11 hours ago [-]
It’s down already. The fund exceeded its capacity.
cog-flex 10 hours ago [-]
If you doubted that we are in a bubble…
felipellrocha 11 hours ago [-]
This can’t be legal, can it?
LNSY 9 hours ago [-]
It's legal if you get invited to Epstein parties, illegal for everyone else
12_throw_away 6 hours ago [-]
Wait wait wait. Jeff Epstein? The New York financier?
tonymet 7 hours ago [-]
FAAS fraud as a service.
desireco42 11 hours ago [-]
Domain is down?
spwa4 11 hours ago [-]
Isn't this highly illegal, and worst of all: this is cheating taxes ...
Let's just say if you really want to commit crimes, don't start with challenging the IRS. Just don't. There's so many horror stories about that.
HumblyTossed 11 hours ago [-]
As the FAQ suggests, it's "pre-legal".
But it's all for mocking the current market... so.
testing22321 11 hours ago [-]
I pay you a million dollars to eat dog shit.
You pay me a million dollars to eat dog shit.
The result? The GDP goes up two million and we both have shit eating grins.
wordpad 10 hours ago [-]
It's a bad example, because both sides actually got the entertainment they paid for and is totally valid economic activity.
cindyllm 11 hours ago [-]
[dead]
mytailorisrich 13 hours ago [-]
"This is a parody website. Any resemblance to real companies wash-trading their revenue is purely coincidental and also definitely happening."
grey-area 11 hours ago [-]
Activities like this are a good sign of a bubble close to bursting. The circular deals Nvidia and OpenAI have done are good examples of this.
It’s a funny joke because it is truly happening (without the fraud as a service middleman). This sort of trade has been rampant the last few years in the AI and GPU space, as you can see from the link above, which details people doing exactly this in the real world with armies of accountants to make it appear legal.
Small businesses are cash strapped. So you find someone who needs your services and you need their services. Instead of exchanging cash, you exchange invoices and do the work. You build them, say, a $5000 website, they perform, say, $5000 of landscaping.
At big boy levels this is often structured as “strategic partnership”.
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.
> 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.
That's simply not true. You may get a certain amount of leeway, but it has to be reasonable.
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.
Exactly. But it doesn't have to be used in this way.
When two companies undervalue the services that they offer to each other, they pay lower taxes. This is the illegal part.
Businesses are taxed on their net income, not get gross.
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.
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.
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.
I did have to look it up, I didn’t know that the US was different in this way. I did have California tax authority make a mistake and take money directly out of my account and there didn’t appear to be a way to fight it. It wasn’t enough to be worth hiring a lawyer over so I let it go but it didn’t give me much faith in the governance of California, very Kafkaesque.
What if you're getting paid in landscaping?
As an individual interestingly it does matter because services received for free are considered taxable income (but businesses are not taxed on their income).
Business are taxed on their net income but many jurisdictions tax businesses on their gross revenue as well (look up GRT and GET).
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.
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”.
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.
Who protects the consumer when they have been gutted of any power?
It amazes me investors or the sec will put up with it
OTOH, most work is not "unique, innovative and visionary" and has a relatively transparent fair market value.
[0] https://en.wikipedia.org/wiki/Barter
Re investors: please list at least one credible source supporting this assertion.
Any lie, misleading omission or misleading half-truth is investor fraud.
https://www.econlib.org/archives/2012/01/an_answer_to_a.html
> True, at the beginning each resident has a $100 liability. But each also has an offsetting financial asset of $100. At the end, they all have neither. So the $100 bill acts as a clearing mechanism
Loans without any economic performance of services generate circular meaningless cash flows yeah, but that's not the case when services are actually performed.
Loans are promises to pay. Business deals are promises to perform services or deliver goods. The difference is easily lost in the details even for accountants and economists.
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.
https://www.ato.gov.au/businesses-and-organisations/gst-exci...
I am sure people avoid the tax element this way, but it's not a sustainable way to go.
Let's say I do a website for $5,000 (putting aside that this a dead industry, and my career for the past 20 years) and the landscaper comes to do the work at my house.
If he cuts a powerline, falls down a hole or chops off his hand, we have a big insurance problem. No paperwork, no contract.
I have had friends who did their side of the contra deal and never got the other part of the bargain fulfilled.
Things like 'I'll paint your house if you can help fix up this old car of mine.'
I have turned down these deals in the past. Same as someone asking me to work for free for 'exposure'.
I am not having a go at the comment above as I think the point is valid - small business doing this is fraud, big business do it and it's fine.
Just my advice to anyone thinking it might work for them. Send the invoice, do the work, get paid in money.
My company builds your company a website, and "charge" $1,000,000 for it.
Your company mows my company's lawn and "charge" $1,000,000 for it.
Both companies now have $1,000,000 in revenue from this transaction.
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 likely be committing securities fraud, bank fraud, wire fraud and 26 other things I can't think of, assuming you are a business of any size at all.
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.
Two adults, a legal subject, sufficiently specified, offer, acceptance, consideration, mutual assent… a contract.
Yeah, they’re getting useful things but they aren’t making money.
You get $5000 of revenue but spent $5000 on services.
You also have to pay taxes on that $5000 like other revenue.
So many small businesses will try to just exchange the services more directly in some way, or give steep discounts. (Tip: This doesn’t mean it’s entirely correct for tax/legal/accounting purposes, so don’t do big deals like this without consulting professionals. I’m just saying this is what’s done by some people)
> The part that makes it not fraud is that both parties do actually do the work.
The cheap criticisms of these deals always miss this part: something of value is traded for the dollars by both parties. Companies can’t simply circulate dollars between themselves.
Businesses do not pay taxes on revenue, they pay taxes on profit.
Other taxes may be applicable though (such as VAT or sales taxes).
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.
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.
https://en.wikipedia.org/wiki/Gross_receipts_tax
https://en.wikipedia.org/wiki/Business_and_occupation_tax
What taxes are owed on revenue? Tou pay taxes on profit only.
> fraud is that both parties
> do actually do the work.
Do they though?
https://web.archive.org/web/20260515043739/https://www.revsw...
That gave me a chuckle. Too real.
If you search for "vat carousel" today, it seems this is still a thing.
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 modern world where most transactions are digital, is this a great use of resources?
My current belief is that there should really just be a wealth tax on assets (Federal) and a land value tax on land (States); nothing else.
https://taxfoundation.org/blog/value-added-tax-vat-progressi...
https://taxfoundation.org/blog/value-added-tax-vat-progressi...
> We take 2% of every swap. Then we swap our revenue with another platform.
This is why substance over form is a thing in revenue accounting. Unless you're an American AI company ofc.
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.
Yeah that doesn’t sound Ponzi-adjacent at all
Read the whitepaper*
*there is no whitepaper
But wtf is up with Firefox? It doesn't like the site's SSL. Okay, they missed points 7, 18 and 24 to 31 in the current security theater checklist.
An error occurred during a connection to revswap.ai. Cannot communicate securely with peer: no common encryption algorithm(s).
Error code: SSL_ERROR_NO_CYPHER_OVERLAP
Whatever?
Hmm if i edit the link to http i get a cloudflare error page. Someone censoring?
And what does it say about the modern internet that the first two things i thought of are security theater and vendor censorship?
> Yet another hedge fund manager explained Icelandic banking to me this way: you have a dog, and I have a cat. We agree that each is worth a billion dollars. You sell me the dog for a billion, and I sell you the cat for a billion. Now we are no longer pet owners but Icelandic banks, with a billion dollars in new assets.
Two economists are walking through a cow pasture.
The first economist says to the other “I’ll pay you $100 to eat that pile of shit.” The second economist takes the $100 and eats the pile of shit.
They continue walking until they come across a second pile of shit. The second economist turns to the first and says “I’ll pay you $100 to eat that pile of shit.” The first economist takes the $100 and eats a pile of shit.
Walking a little more, the first economist looks at the second and says, "You know, I gave you $100 to eat shit, then you gave me back the same $100 to eat shit. I can't help but feel like we both just ate shit for nothing."
"That's not true", responded the second economist. "We increased the GDP by $200!"
For example, if you've ever wondered why useless art trades at such eye-watering valuations, the answer is that the high valuations are fictions that governments will accept for tax purposes, from which you can derive a variety of exciting tax consequences: https://naturalist.gallery/blogs/journal/understanding-the-f... more-or-less because they agree among themselves what the art is valuated at for their own benefit.
Like you have a measure (GDP) and it can't accurate measure things unless a sale occurs. So even if the money is a wash there was an actual activity occurring in the economy and now it's recorded.
Can it also generate SOC2 certifications in days?
Let's just say if you really want to commit crimes, don't start with challenging the IRS. Just don't. There's so many horror stories about that.
But it's all for mocking the current market... so.
The result? The GDP goes up two million and we both have shit eating grins.
https://www.bloomberg.com/graphics/2026-ai-circular-deals