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Trade exchanges,
initially known as barter clubs when the concept was introduced
42 years ago, now number over 500 nationally.
Although
independently operated, their collective client base forms a
"business-to-business" network comprised of an estimated 450,000
companies
(retailers, services, and manufacturers).
When trading through
a trade exchange members have the opportunity
to make multi-lateral trades…rather than one-on-one trades. Which
means
many greater options are available to you. That's
because when you make a trade
with another party within the exchange you do not take their product as a
payment,
but rather you receive trade dollars.
Those trade dollars
are deposited by the exchange into your account, and are
then available for spending within the exchange. As a member you can
spend
your trade dollars with others within the exchange whenever you
wish to buy their products or services.
The trade dollar is
equivalent to one cash dollar for use of accounting purposes.
Sales are normally made at full retail with a 10% to 15% cash
commission
paid to the exchange for its services.
Under the Tax
& Equity Fiscal Responsibility Act of 1982 (TEFRA Act)
trade exchanges are classified as third-party record keepers, having the
same
fiduciary obligations as bankers and stock (securities) brokers.
For tax purposes trade dollars are taxable in the year they are
"earned"
and reported as such on 1099-B forms to the IRS.
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