Trade Exchange Dollars

[susieq]

Self employed taxpayer just called and said that he forgot to include his "trade exchange dollars" in his gross receipts for his Business Schedule. This is the first year for the Exchange membership and has been accustomed to providing income based on his bank deposits.

He does a job for a person who is also in this exchange club. No dollars pass across the palms. TP gets credit in his account for the amount of the job. He is then entitled to services, merchandise, etc from participating merchants.

My question is concerning his mentioning that he was expecting a Form 1099B. Can we put this amount on the Schedule C - thought the B's were Proceed statements. What about the SE tax issue?

[Bill Tubbs]

Barter

Doesn't matter that no cash passed -- it's barter income. The value of the service provided must be added to his Sch C income. Yes, this will affect the SE tax as well.

Bill

[DaveO]

What about the SE tax issue?

Maybe you could seperate the amount of tax due to the use of the trade dollars and have your client render payment of that amount in trade dollars?

[susieq]

Additional concern particulars

My concern is that the dollar amount was suppose to be reported to the tp by the Exchange on a 1099B - I have only seen the 1099B used for reporting stock sale proceeds. Should we note on the Schedule C that the Gross Receipts includes $$'s reported on a 1099B for Bartering income?

For 2006, I can explain the increase in income, SE tax and Gross receipts on the 1040X is due to receipt of a 1099 B for bartering income.

[DaveO]

I was kidding about paying tax in trade dollars

My concern is that the dollar amount was suppose to be reported to the tp by the Exchange on a 1099B - I have only seen the 1099B used for reporting stock sale proceeds. Should we note on the Schedule C that the Gross Receipts includes $$'s reported on a 1099B for Bartering income?

For 2006, I can explain the increase in income, SE tax and Gross receipts on the 1040X is due to receipt of a 1099 B for bartering income.

Just report the income as you would cash receipts. If he has received goods or services for his business in exchange for his goods or services report that as expense. You can report the 1099-B amount on line 6 of the "C" to make it easier to spot.