Brain Dead> Barter

[BOB W]

Are Barter Receivables taxable to a CASH basis taxpayer? T/P did the work but did not collect anything for it..........

[AJsTax]

No, it is not taxable

until he constructively receives something as compensation, be it cash or other payment.

[taxea]

was any agreement made as to what he would receive in kind for the work he did? He should be claiming FMV for his services as income and expensing FMV of what he received as the expense. The amounts wash each other out but they do have to be reported

[newbie]

was any agreement made as to what he would receive in kind for the work he did? He should be claiming FMV for his services as income and expensing FMV of what he received as the expense. The amounts wash each other out but they do have to be reported

Only if it's an business expense can he deduct it. If I prepare do bookkeeping in exchange for someone cleaning my kitchen would not I need to claim as income my bookkeeping services for the FMV of my kitchen being cleaned, but I can't deduct the FMV of a clean kitchen.

[BHoffman]

the FMV of a clean kitchen.

Priceless

[newbie]

the FMV of a clean kitchen.

Priceless

LOL!!!!!!!

[BOB W]

I found this article that seems to say barter credits are taxable. ?????

http://www.barternews.com/tax_tips_for_business_barterers.htm

[oceanlovin'ea]

tax return for painting bedroom

I traded services for one of my clients a few years ago. I did his s corporate tax return and his personal and he painted my bedroom.

Was a good trade!!!!

Had income but no expense. Still worth it.



Linda

[Jesse]

My first thought was in agreement with AJ, however, the article you linked suggests the "credits" are taxable and that is why it would be wise to use the credits for a business expense in the same year.

If not a business expense you can't deduct it anyway, but as also suggested in the article, it still suggests that yes it is taxable in the year you earned the credits.

Is it a material amount? Will it make a big difference in the end result?

If not I would add it in when credits earned. No Cite, just opinion.

Second thought:
Actually the article does not say whether the transaction discussed is for an accrual or cash basis taxpayer. If a cash basis taxpayer I would reason payment not complete until barter credit is received. If I prepare the tax return in exchange for $XX's in painting, until the painting is complete I have not been paid, therefore no income received. Again, just opinion.

[Davc]

I believe if barter is done though an "exchange" then the credits are taxable when they're received. If done directly with an individual, then it would be taxable when the good or service was received.

[Maribeth]

We have a very active barter organization in town and have several business clients that are members of the organization.

We treat the activity in the barter account just like a checking account. We get a monthly statement for our clients from the barter organization. It shows the sales & the purchases. Everything is recorded in the month incurred, just as if the client were using cash.

Maribeth

[AZ-Tax]

Depreciated bus item in exchange for bus labor

In exhange for some labor client needed done to their busienss, client gave laborer a item(asset) that has been fully (100%) depreciated several yrs ago. Though I am no bookkeeper I would guess the client at least needs to recapture the asset based on residual value of asset but now what is residual asset? Seems to me a laborer saw the value of the asset as equal to the quote the laborer gave my client OR it could be one of those things where my client could not afford out of pocket cash and said hey, how about I give this asset of mine in exchange. Actually that really is not any difference then if my client said, I can only pay your 75% (cash) of the quote. Labor is complete.