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S-Corp Barter for Personal Services

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    #1

    S-Corp Barter for Personal Services

    Hey all,
    I know the general rules on barter, but was curious about this one, since it involves me.
    My personal trainer and I are going to be exchanging services; I do all his books and taxes, he gives me access to the gym and all the personal training I can take. I am an S-corp. So, do I report the value of the personal training as income to the S-Corp? That seems odd, in that it really isn't going to the S-corp, it's going to me. Do I report it on Schedule C subject to SE? That also seems odd, since I have a perfectly good S-Corp for the accounting practice, and it would seem odd to have my accounting work in two different places. I suppose I could put it as S-Corp income, and pass it through to me on the W2 as increased wages. Any thoughts? Thanks all!

    ATG
    "Congress has spoken to this issue through its audible silence."
    Anyone ever notice they beat the daylights out of the definition of a child, but they don't spend much time at all defining "parent"?
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    #2
    Originally posted by AuditorTurnedGood View Post
    Hey all,
    I know the general rules on barter, but was curious about this one, since it involves me.
    My personal trainer and I are going to be exchanging services; I do all his books and taxes, he gives me access to the gym and all the personal training I can take. I am an S-corp. So, do I report the value of the personal training as income to the S-Corp? That seems odd, in that it really isn't going to the S-corp, it's going to me. Do I report it on Schedule C subject to SE? That also seems odd, since I have a perfectly good S-Corp for the accounting practice, and it would seem odd to have my accounting work in two different places. I suppose I could put it as S-Corp income, and pass it through to me on the W2 as increased wages. Any thoughts? Thanks all!

    ATG
    It looks like your SCorp has the barter income for the services provided by your personal trainer to the extent of the cost the the personal training. Then you could issue a W-2, as you suggested, or take it as a net profit distribution.

    You can't not claim business income by ignoring this type of barter since you are providing accounting services with this barter.
    Last edited by BOB W; 11-04-2009, 11:01 AM.
    This post is for discussion purposes only and should be verified with other sources before actual use.

    Many times I post additional info on the post, Click on "message board" for updated content.

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      #3
      Originally posted by BOB W View Post
      You can't not claim business income by ignoring this type of barter since you are providing accounting services with this barter.
      I figured, but I wasn't sure just how to get it onto the return. Thanks!
      "Congress has spoken to this issue through its audible silence."
      Anyone ever notice they beat the daylights out of the definition of a child, but they don't spend much time at all defining "parent"?

      Comment

        #4
        Originally posted by AuditorTurnedGood View Post
        I figured, but I wasn't sure just how to get it onto the return. Thanks!
        A general journal entry of debit to NPD and a credit to fee income is all that is needed and captioned barter exchange.

        Lets supposed your services are $3,000 and the personal trainer's fee is $2,000. In this case what happens to the $1,000 difference??? I say nothing, as it is just like it wasn't billed...???? Or should the barter income be $3,000 because that is what was being billed in the past and NPD only be $2,000..............??????????
        This post is for discussion purposes only and should be verified with other sources before actual use.

        Many times I post additional info on the post, Click on "message board" for updated content.

        Comment

          #5
          That's a good question. I think in this case the value of my time is out of the picture on my end - my services are only valued at what the client is "charged" for them, so I would say $2,000 is my income. Make sense?

          ATG
          "Congress has spoken to this issue through its audible silence."
          Anyone ever notice they beat the daylights out of the definition of a child, but they don't spend much time at all defining "parent"?

          Comment

            #6
            Nothing wrong with your giving him a discount, especially since he is so prompt in paying his bill...
            "The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith

            Comment

              #7
              Also, the concept of barter is an agreement to exchange goods and/or services of equal value. If my client is providing me with services worth $2k, and I am providing services worth $3k, I'd say he owes me $1k in cash. But then, circumstances figure into any decision.

              Personally, I don't much like bartering because I always think I'm goint to get the short end of the stick

              I wonder if we'll be seeing more bartering among our clients as the economy struggles to improve?

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