Taxes on transactions of services
Do Alice and Bob have to figure out the fair market value of their services and report that as income or something? Yes, exactly that.  See Topic 420.   Note that if the computer program is for Bob's business, Bob might be able to deduct it on his taxes.  Similarly, if the remodeling is on Alice's business property, she might be able to deduct it.  There might also be other tax advantages in certain circumstances. It's called bartering and the IRS has a page titled Four Things to Know About Bartering. The summary is -  The bottom line is this is taxable.
"In June 2016 the American Institute of CPAs sent a letter to the IRS requesting guidance on this question.   Quoting from section 4 of this letter, which is available at https://www.aicpa.org/advocacy/tax/downloadabledocuments/aicpa-comment-letter-on-notice-2014-21-virtual-currency-6-10-16.pdf If the IRS believes any property transaction rules should apply differently to virtual currency than to other types of property, taxpayers will need additional guidance in order to properly distinguish the rules and regulations. Section 4, Q&A-1 of Notice 2014-21 states that “general tax principles applicable to property transactions apply to transactions using virtual currency,” which is guidance that is generally helpful in determining the tax consequences of most virtual currency transactions. However, if there are particular factors that distinguish one virtual currency as like-kind to another virtual currency for section 1031 purposes, the IRS should clarify these details (e.g., allowing the treatment of virtual currency held for investment or business as like-kind to another virtual currency) in the form of published guidance. Similarly, taxpayers need specific guidance of special rules or statutory interpretations if the IRS determines that the installment method of section 453 is applied differently for virtual currency than for other types of property. So, at the very least, a peer-reviewed committee of CPAs finds like-kind treatment to have possible grounds for allowance.   I would disagree with calling this a ""loophole,"" however (edit: at least from the viewpoint of the taxpayer.)  At a base technological level, a virtual currency-to-virtual currency exchange consists of exchanging knowledge of one sequence of binary digits (private key) for another.  What could be more ""like-kind"" than this?" Register an account with multiple transfer services and see who will actually give you the best rate, including any fees charged by the service itself, at the time you want to make the transfer. Research the available methods to get the money into and out of the transfer service to five the lowest cost options, which would ideally be free on both ends. Be patient. It can take a week for money to arrive in your recipients account depending on the methods of getting the money into and out of the transfer service. You might also be called to verify the transaction before it goes through. The transaction will be taxable in India. You will have to pay Capital Gains tax. I am assuming that you purchased the house while you were Indian Resident for tax purposes. As such its needs more paper work to get the money back to US. Consult a CA in India who will help with the paperwork. You haven't mentioned your tax status in US, one you update it, someone will post a US tax aspects of the transaction. Forms for the Colorado LLCs are online. You can find the link to the dissolution form here, and instructions here. IRS instructions are here. That's what they want: To close your business account, send us a letter that includes the   complete legal name of the entity, the EIN, the business address and   the reason you wish to close your account. If you have a copy of the   EIN Assignment Notice that was issued when your EIN was assigned,   include that when you write to us at: Internal Revenue Service Cincinnati, Ohio 45999 Everything is pretty straight forward.  Note that you might be required to file a initial/final tax return if you had any transactions. The technical answer is defined by the laws of state you live in but most (all?) states with a sales tax have some form of use tax. Where if you buy something in another state for use in your home state you are technically liable for sales tax on it regardless of whether the merchant charged you tax on it or not. I don't think many people actually pay the use taxes, and enforcement generally seems rare. Okays, so the prices we pay for goods and services aren't set by our income levels. Why should taxes be any different?  Surely they should be set by the benefits we receive from the community as measured by the market? That's what LVT is and does. So here's our [answer](http://www.taxalmanac.org/index.php/Treasury_Regulations,_Subchapter_A,_Sec._1.162-21).  What it looks like, is basically that the **fines** are not deductible, but the **damages** are.   At any rate, I don't think it's questionable at all. It reduces the overall amount of the amount they have to pay, but it's certainly not like they come out ahead on the deal. Further, I presume it's been argued before a court that since the income was illegally obtained (through some sort of illegal function of the business) then the business paid taxes on income it shouldn't have made in the first place. 1: Gambling losses not in excess of gambling winnings can be deducted on Schedule A, line 28.  See Pub 17 (p 201).  Line 28 catches lots of deductions, and gambling losses are one of them.  See Schedule A instructions. 2: If the Mississippi state tax withheld was an income tax (which I assume it was), then it goes on Schedule A, line 5a.  In the unlikely event it was not a state or local tax on income, but some sort of excise on gambling, then it may be deductible on line 8 as another deductible tax.  It probably is not a personal property tax, which is generally levied against the value of things like cars and other movable property but not on receipts of cash; line 7 probably is not appropriate.  The most likely result, without researching Mississippi SALT, is that it was an income tax.  See Sched A Instructions for more on the differences between the types of taxes paid. Just to be clear, these statements hold if you are not engaging in poker as a profession.  If you are engaging in poker as a business, which can be difficult to establish in the IRS' eyes, then you would use Schedule C and also report business and travel expenses.  But the IRS is aware that people want to reduce their gambling income by the cost of hotels and flights to casinos, so it's a relatively high hurdle to be considered a professional poker player.