Do You Remember?

[Bird Legs]

The old Barter Clubs? You join and then exchange your services for other services or
goods?
What brought this to mind was I had to go to Pub. 525 to check something out and
this was mentioned in there.
My mind is playing tricks on me these days and I cain't remember if this type bartering
was "supposed" to be tax free or not. Of course, they were not, but could not remember
if that was one of the selling points of the club.
Any way, time to stop remembering and start back to work.

[Bees Knees]

I knew a carpet cleaner that was a member. He did allot of carpets, but about the only thing he could trade for was expensive dinners at some local fancy restaurants.

I remember getting invited out to dinner many times.

[Bird Legs]

Bees

Did your client report this as income or just forget about it?

[Armando Beaujolais]

I've seen people get nailed when they didn't report their income from a barter exchange. I know people don't want to pay tax, but the IRS doesn't care if you're paid in cash or in beads. FMV is taxable revenue.

Most of the barter exchanges issue 1099-B's to their members at the end of the year showing the FMV of goods or services received by the member. There's a common misconception that bartering doesn't represent taxable income (wishful thinking). Think about it. Could the car dealer walk across the street and trade a new car for a fancy new fishing boat? Of course not.

I once had a cowpie hurling derby with a local TV reporter. She did a report on a barter exchange downtown, and said "You can come down and trade what you have with other people, and the best part is that you don't have to pay tax."

I sent a letter to the TV station and informed them that the little granny they showed knitting mittens would have to knit her little heart out to pay the SE tax next year when she got her 1099 in the mail. It didn't take them much checking to realize that "tax free" was not good information. Apparently the gal took some heat for saying it because she called me and was very unfriendly about my letter.

Against my nature, I backed off. It's probably not the smartest thing in the world to get into a battle with someone who tools around town with a camera crew.

[Bees Knees]

Did your client report this as income or just forget about it?

He wasn't a client. He was a friend. If you want to remain friends with friends, you don't give out tax advise unless you're asked.

[John of PA]

Barter Clubs

I once was approached to joint a Barter Club (was called Butcher Trade Exchange). The fee to join was $ 350. When they told me I had to pay the $350. in cash and I could not barter for it, I was shocked at this hiprocracy(sp), and did not join.