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Topic: how does the PBS accounting work?

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Subject: how does the PBS accounting work?
Date Posted: 1/18/2009 12:44 AM ET
Member Since: 5/3/2006
Posts: 6,436
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I'm curious about the "backing up credits with books" accounting that PBS uses. They have to put a book in the system for every credit they give away for free, correct? But where are those books in the system? Is there a special PBS account that gets requests and mails out books?

Just something I've been wondering about for ages.

Date Posted: 1/18/2009 1:46 AM ET
Member Since: 5/23/2008
Posts: 188
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Not sure about this but maybe it's the books you join with? When you post 10 books you get 2 free credits but that leaves 8 books that could "back" other credits. 

Amy
Date Posted: 1/18/2009 3:21 AM ET
Member Since: 3/11/2008
Posts: 1,716
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My guess is that they have to have the cash to back up those credits.

Date Posted: 1/18/2009 10:16 AM ET
Member Since: 4/7/2007
Posts: 2,027
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I would love to see a balance sheet for PBS.

Date Posted: 1/18/2009 11:28 AM ET
Member Since: 8/16/2007
Posts: 15,185
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All the details are around the forum somewhere. They don't have a book to back the credit, they have a reserve fund to back the credits not covered by a book in the system.

Date Posted: 1/18/2009 1:04 PM ET
Member Since: 1/19/2006
Posts: 472
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Credits that members have earned are backed with an actual book i.e. a book that has been sent and received.  PBS backs credits issued via Kiosk are backed by the money paid.  Start-up credits and refferal credits are backed with money from other sources.  Partly, fees from DC, printable postage, Kiosk sales, BOB frees and so on, but since as I understand it PBS isn't operating in the black yet, money from investors and others hoping the site will take off and make money.

Besides needing to find money to back up start up credits, PBS is taxed on the balance of money in the account used to back credits, since it is an asset.

That's my understand of how the PBS econoomy works.

Date Posted: 1/18/2009 7:56 PM ET
Member Since: 5/3/2006
Posts: 6,436
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So the thing about every credit being backed up by a book is just one of those bits of info that keeps flying around even though it's no longer true?

Date Posted: 1/18/2009 8:41 PM ET
Member Since: 1/19/2006
Posts: 472
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No.  Our credits that we've gotten by exchanging books are backed up by books.    It's the system generated credits that aren't backed up by a physical book, although when the system was new they may have been.  At this point the system is simply to big for that to be a practical solution.

Date Posted: 1/18/2009 8:42 PM ET
Member Since: 8/16/2007
Posts: 15,185
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I think it is just interpreted wrong Willa. The goal is to have all the credits in the system backed by a book. Only if there are more credits in the system than can be backed by books, then PBS needs to have a fund to cover it so that if the site went away tomorrow and everyone had to liquidate their credits, there would be a book or $ to cover it. That is why many gift their start up credits back to the site after they've been here a while, to help balance the site.

I haven't heard the tax on the reserve thing before, that doesn't make sense to me. It is a liability they have to cover, not income.



Last Edited on: 1/19/09 12:36 AM ET - Total times edited: 1
Date Posted: 1/18/2009 9:38 PM ET
Member Since: 6/11/2006
Posts: 12,826
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that interest to know i never taught about it.

Date Posted: 1/19/2009 12:37 AM ET
Member Since: 1/19/2006
Posts: 472
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Melanie, they mentioned the tax thing in the last couple of newsletters.  It's not income, but an asset, which is taxable.  Sense and the IRS are not always one and the same.

Date Posted: 1/19/2009 2:00 PM ET
Member Since: 11/13/2005
Posts: 510
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>  It's not income, but an asset, which is taxable.  Sense and the IRS are not always one and the same.

I suspect you are confusing the IRS (federal) with the State of Georgia Department of Revenue.    The IRS taxes net income.  The State of Georgia has a property (Ad Valorium) tax that (I believe, not being a Georgia resident) applies to the assets (including inventory) of a business. 

http://www.etax.dor.ga.gov/PTD/adm/taxguide/gen/taxation.aspx

Date Posted: 1/19/2009 2:40 PM ET
Member Since: 8/16/2007
Posts: 15,185
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Melanie, they mentioned the tax thing in the last couple of newsletters.  It's not income, but an asset, which is taxable.  Sense and the IRS are not always one and the same. - As I said I didn't look back to see how it was stated by them, but it doesn't make sense to me in the context of the IRS. I do tax returns for non-profits and corporations and taxing assets at a federal level is what doesn't make sense to me. Taxing the revenue made on credits sold by PBS makes sense to me, but not taxing assets that exist solely to cover debts does not.