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.
> 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
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.
> 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”.
> 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.
> 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.
> 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.
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.
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?
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.
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).
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.
> 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
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.
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.
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.
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.
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 be committing securities fraud, bank fraud, wire fraud and 26 other things I can't think of.
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.
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.
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.
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.
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.
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.
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.
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.
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?
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.
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.
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.
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.
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
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.
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!
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
> 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
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.
> 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”.
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.
> 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.
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.
> 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.
> 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.
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.
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?
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.
> 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?
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).
There are corporate taxes on revenue in some situations
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?
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
And who chooses how to value unique, innovative and visionary work?
Article 1 judges in US Tax Court?
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.
It's a cool little analogy, one I'd never heard of before
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
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.
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.
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.
The man who saved Pumplesdrop By W. J. Turner
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.
In Australia these kind of deals are treated like income.
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.
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.
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 be committing securities fraud, bank fraud, wire fraud and 26 other things I can't think of.
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.
But they also have 1,000,000 of expenses, at least some of which is probably deductible from income.
> No paperwork, no contract.
Two adults, a legal subject, sufficiently specified, offer, acceptance, consideration, mutual assent… a contract.
Doesn't feel very far off from the money circularly trading hands between Nvidia, Oracle, OpenAI etc.
Yeah, just a few hundred billion dollars, basically the same...
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.
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.
It depends if your goal is to sell the company or evade taxes, of course.
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.
> 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).
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.
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.
There are jurisdictions in the US where businesses owe tax on revenue.
https://en.wikipedia.org/wiki/Gross_receipts_tax
https://en.wikipedia.org/wiki/Business_and_occupation_tax
> You also have to pay taxes on that $5000 like other revenue.
What taxes are owed on revenue? Tou pay taxes on profit only.
and you dont need to pay taxes? how does that work
You net zero if you pay $1 and make $1.
Of course you have to pay taxes!
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.
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.
How do employees get paid here?
> The part that makes it not
> fraud is that both parties
> do actually do the work.
Do they though?
Thank god, it's satire
https://web.archive.org/web/20260515043739/https://www.revsw...
Related: https://xcancel.com/haridigresses/status/2055107567429292081
> "Closed a $40M Series B in 11 days. Have not spoken to a customer since 2022."
That gave me a chuckle. Too real.
"This is a parody website. Any resemblance to real companies wash-trading their revenue is purely coincidental and also definitely happening."
"Any comparison to OpenAI is totally valid"
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.
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?
VAT is a regressive tax. It hits everyone along the way, rich or poor. It hits the poor especially hard proportionally.
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.
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.
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.
Source for the "5%"?
VAT carousel is fraud. This is pre-legal.
I first hear about this from a guy running a warehouse. He noticed the same boxes commining in again and again.
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.
Anyone else getting "SSL_ERROR_NO_CYPHER_OVERLAP"
Has anyone here actually viewed the page? Seems strange that it got upvoted if no one can view the page.
Confirmed. Firefox and Chrome.
Visiting the website's url (revswap.ai without www) redirects me to revai.com which is for sale on godaddy... Fastest enshittification ever?
Maybe the IRS didn't get like the joke?
Yes. :/ GrapheneOS over here
I'm on firefox on windows.
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.
You'll be the mayor of Foursquare in no time!
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
What if they buy each other's NFTs instead?
offsetting in what horizon? I give you 100 in q4 2026 you give me 100 in q1 2027
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.
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
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!
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.
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.
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.
It's weird to keep referring to these AI behemoths as "startups".
They have no scalable business model that yields profit outside of raising more investment, so yes, somehow they are still startups
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.
> They have no scalable business model that yields profit outside of raising more investment
Yeah that doesn’t sound Ponzi-adjacent at all
Let no one have the excuse of "this was so unexpected" once it burns down.
Pre-legal. That is gold.
Never seen that particular SSL error before!
Reminds me a bit of the NFT parody site https://nfd.miami
Reinventing tax litigation from first principles
Do it among a group of companies to make it more legal, yc way
I like this bit:
Read the whitepaper*
*there is no whitepaper
AKA YC companies buying from each other.
I don’t see anything topping the internet today better than this. Perfect, no notes.
(Pending) Crime-as-a-Service
FAAS fraud as a service.
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?
Wouldn't "cookthebooks.ai" be a better name?
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!
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.
What are the types of ARR the platform support?
Can it also generate SOC2 certifications in days?
They gotta become a platform, so likely more will come
I heard they started a hardware unit operating in stealth, but the rumor is they’re working on a box.
If you doubted that we are in a bubble…
Is there a way we can leverage the Gig Economy to book large gains?
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.
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!"
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.
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.
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.
It’s down already. The fund exceeded its capacity.
This can’t be legal, can it?
It's legal if you get invited to Epstein parties, illegal for everyone else
Domain is down?
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.
As the FAQ suggests, it's "pre-legal".
But it's all for mocking the current market... so.
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.
It's a bad example, because both sides actually got the entertainment they paid for and is totally valid economic activity.
"This is a parody website. Any resemblance to real companies wash-trading their revenue is purely coincidental and also definitely happening."
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.
https://www.bloomberg.com/graphics/2026-ai-circular-deals
It's a joke
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.