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Bartering in business....“you scratch my back I’ll scratch yours”? Probably a taxable transaction. Just sayin!

Bartering is the exchange of goods or services. A barter exchange is an organization whose members contract with each other (or with the barter exchange) to exchange property or services. The term doesn't include arrangements that provide solely for the informal exchange of similar services on a noncommercial basis. Usually there's no exchange of cash. An example of bartering is a plumber exchanging plumbing services for the dental services of a dentist.

Reporting Bartering Income

You must include in gross income in the year of receipt the fair market value of goods or services received from bartering. Generally, you report this income on Form 1040, Schedule C.pdf, Profit or Loss from Business (Sole Proprietorship), or Form 1040, Schedule C-EZ.pdf, Net Profit from Business (Sole Proprietorship). If you failed to report this income, correct your return by filing a Form 1040X.pdf, Amended U.S. Individual Income Tax Return. Refer to Topic No. 308 and Should I File an Amended Return? for information on filing an amended return.

For more information click here:

https://www.irs.gov/taxtopics/tc420

steve@stevesimsea.com