Friday, June 15, 2012

Barter Income

Every other year or so, the IRS releases a tax-tip or memo that covers barter transactions. It seems like when hard times come along, individuals and businesses try different strategies to keep the same level of income. The IRS recognizes the need to get creative in times of need, however, just because you may not receive cash as payment for goods or services does not mean that you have not completed a taxable transaction.

The IRS recently released a Tax Tip related to barter transactions, in which it reminds tax payers that barter transactions are usually reportable as some sort of income on their personal or business return. It also reminds barter exchanges of their 1099-B filing requirement (Tax Tip 2012-33).

If you have a situation whereby you receive property other than cash for goods or services, you have probably engaged in a barter transaction and should report this income on the appropriate income tax return for the year. If you have additional questions related to barter transactions, please consult this IRS publication, or your tax professional.  

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