Barter Income and Taxes - From the Internal Revenue
Service
Note: This information can be found at
irs.ustreas.gov, and should be
checked to ensure this is the most up-to-date information available. This
information was accurate as of November 27, 2000.
Bartering Income
Topic 420
Bartering occurs when you exchange goods or services without
exchanging money. An example of bartering is a plumber doing
repair work for a dentist in exchange for dental services. The fair
market value of goods and services exchanged must be included in
the income of both parties.
Income from bartering is taxable in the year in which you receive
the goods or services. If you failed to report bartering income on
returns you have already filed, you must correct this by filing an
amended return, Form 1040X, for each year involved. For
information on amended returns, see Topic 308.
If you are in a business or trade, you may deduct any costs you
incurred to perform the work that was bartered. If you exchanged
property or services through a barter exchange, you should
receive a Form 1099-B, Proceeds from Broker and Barter
Exchange Transactions, or a similar statement, by January 31,
2000. The Form 1099-B or other statement generally will show the
value of any cash, property, services, credits, or scrip you received
from the exchange during the year. The IRS will also receive the
same information.
If you receive income from bartering, you may be required to make
estimated tax payments. See Topic 355 for additional information.
Additional examples of bartering, and information on how to report
the income, are described in Publication 525, Taxable and
Nontaxable Income. Publications and forms may be downloaded
from this site or ordered by calling 1-800-829-3676. |
