Paying With Goods

[gman]

Farmer pays worker with a small tractor that farmer purchased. What is the correct way to report this? Let's assume worker is non employee. Would it be with a 1099 and deducted as labor.

[BHoffman]

http://www.irs.gov/businesses/small/article/0,,id=187920,00.html

Hi gman - please see the link above for info on barter transactions. HTH.

[Snaggletooth]

1099-misc

I suspect part of the reason "bartering"-type transactions are done in lieu of cash is to avoid reporting income. And the 1099-MISC requirements are for cash payments, and placed on the payer (even though the source may be indirect).

There may be a fine line between "bartering" and trading-in, especially if there is a combination of settlements between labor and equipment.

I doubt many people know of the 1099-B requirement, and indeed if one of our farmers or contractors shows up with one, I wonder how many of us among tax preparers would know why it was issued.

Not I. Not until I read this post. That's why this board is such a good source of information.

[Y2KEA]

While reporting as barter income is required, it appears as though the farmer has a disposition of depreciable property which would be shown on the 4797. Just another twist to the reporting issue.

[Gary2]

I suspect part of the reason "bartering"-type transactions are done in lieu of cash is to avoid reporting income. And the 1099-MISC requirements are for cash payments, and placed on the payer (even though the source may be indirect).

There may be a fine line between "bartering" and trading-in, especially if there is a combination of settlements between labor and equipment.

I doubt many people know of the 1099-B requirement, and indeed if one of our farmers or contractors shows up with one, I wonder how many of us among tax preparers would know why it was issued.

The 1099-B requirement is for Barter Exchanges, not individuals. In this case, I expect either a W-2 or 1099-MISC is required, since it's for personal service. I don't think either of these are limited to cash. For example, a game show prize goes on a 1099-MISC (albeit in box 3, not box 7), while personal use of a company vehicle, or an award of property that didn't come under one of the exceptions would be included on a W-2 for an employee.

[taxea]

Farmer pays worker with a small tractor that farmer purchased. What is the correct way to report this? Let's assume worker is non employee. Would it be with a 1099 and deducted as labor.

Is this a farm not income producing? In this case the farmer is not required to provide a 1099 of any sort. If he doesn't have a business then he doesn't have to issue a 1099 or W-2 does he?

[S T]

Example

If I have a taxpayer that is a sole proprietor - Sched C - she receives $ 80 for services in the form of a gift card ? This is not Bartered?? Just simply reported as income on Sched C via a 1099 Misc Form and the Company payiing for same, issues 1099 Misc and deducts same on their return.

If that same taxpayer received $ 80 for services that she could use from the Company she "traded/bartered" with--- then a 1099-B Bartered form for taxpayer?

I have a potential situation, taxpayer is offering consulting services for $ 100 - Recipient of these Services receives Accounting Services

Should it be reported on 1099 MISC or 1099-B Bartering???

I discourage trading of services and bartering - but now it seems to have been a more frequent question due to the economy - so guess we have to be aware.

More thoughts and direction would be greatly appreciated.

Sandy

[Gary2]

I have a potential situation, taxpayer is offering consulting services for $ 100 - Recipient of these Services receives Accounting Services

Should it be reported on 1099 MISC or 1099-B Bartering???

1099-MISC. See the instructions for box 7; there's a barter example involving an attorney and a painter.