Small businesses sometimes barter to get products or services they need. Bartering is the trading of one product or service for another. Usually there is no exchange of cash. An example of bartering is a plumber doing repair work for a dentist in exchange for dental services.
The IRS reminds all taxpayers that the fair market value of property or services received through a barter is taxable income. Both parties must report as income the value of the goods and services received in the exchange.
Here are four facts about bartering:
For more information, see the Bartering Tax Center in the business section at IRS.gov.
TaxACT makes figuring the tax on bartering exchanges and income easy and fast. Prepare, print and file your federal Form 1040 and Schedule C free now with TaxACT Free Federal Edition.
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