Working for free is always a benefit to those around you. While the industry constantly struggles to lower the bar in one form or another and only makes slow progress, by giving away professional labor, you're able to lower the bar much faster than others, giving you a real advantage when it comes to the race to the bottom. Most of us really appreciate the guy that works for free. On behalf of the industry, thanks!
As far as the value of your hours; the FAA considers the logging of flight time to be compensation. Unless your "employer" issues you documentation establishing a monetary value for the time you rode along, how is one to account for it?
If I do a flight to Paris, it's in an expensive airplane, and I do log the time. Should I pay tax on the time I logged? I think not. I get paid for my flight time, and I pay tax on the money that I receive from my employer.
If you fly as an instructor with a student and get paid for an hour of instruction, you'll end up paying tax on what you get from the employer or student; it may be as a contractor or employee, depending on your arrangement, but there's no tax you pay on the hour of flight time you logged: it's your job to fly, whether it's a trip around the pattern or a trip across the Atlantic.
If you're flying with someone doing traffic watch and refusing to get paid, it's possible that a dollar value could be attached to the aircraft, but is there any difference in that regard, if you're acting as pilot or instructor, from a trip around the pattern or a point to point flight on a charter? The value on which you're taxed isn't the cost of the airplane or the logged hour, but what you're paid.
While you're chewing on that, give some thought to being a professional. Professionals get paid. Professionals who give away their services do harm to the industry as a whole, and you're filling a seat that could have a paid pilot in it.
The owner is taking advantage of the situation; he's dangling a carrot in front of someone hungry enough for hours to prostitute themself. Some pilots are unprincipled enough that they'll justify paying for employment, to log the hours. A particular helicopter operator does a whirlwind trade in photographing boats on revenue flights, and gets his pilots to pay him to rent the helicopter...and he doesn't have a shortage of those willing to pay to work there. Flying for free really isn't any better.
Think about this: those who defecate in their bed must eventually lay in it, and you will; one day you may be the one crying loudest about your wages and quality of life...but every time someone flies for free, and every time someone pays for their job, they've contributed to the decline of the industry, and have defecated in the collective bed. Those are often the ones who howl the loudest, later on. Don't be that guy.