Barter income from Crop share

[Gretel]

Never dealt with barter income and feel real stupid to ask this question but have a knot in my head. Hear goes:

Farmers, cash, had neighbor cut his hay and paid with half of his crop, which will be sold in 2012.

2011 - 50% of value of crop to be reported on 1099 and is deducted as costs

2012 - The same value is used as income in addition to this farmers 50% when hay is sold?

(The other farmer reports as income in 2012?) Wait this must mean that 1099 should be issued in 2012 and expense deduction also for 2012.

So, for my client it is just a wash?

[AJsTax]

This is not reported

This type of deal is almost never reported. Except on each one's farm. They are sharing in the work and the crop, not really providing a service for each other in a true barter situation.
If you did want to do a barter, the value of the hay given to the equipment operator would be fmv day of harvest. When he sells he would subtract his costs. The farmer that owns the hay would have the value of hay given to the equipment as costs to produce his share.

But as they are sharing in a crop I would not do anything. it is really a wash.

[Gretel]

Thanks, AJ, I might not have made myself clear.

There is no sharing in work. Farmer A cut hay for Farmer B. Farmer B does not do any work for Farmer A. Hay belongs to Farmer B who paid Farmer A with half of his crop.

I think my thinking in my first post was flawed. Farmer B has expense only (value of hay (day of harvest or day sold??) The half of hay that now belongs to Farmer A has no impact on Farmer B income any more.

Still unsure.

[Gretel]

Bringing back to the top.

[Gretel]

After getting some more input, AJ or Jiggers or anyone else, does this sound right to you:

A reports only 1/2 of the income when sold in 2012 - so expense for labor and forfeited income is a wash

B doesn't get a 1099 at all, he just reports the sale of the hay in 2012