Here are four facts about bartering:
1. Barter exchange. A barter exchange is an organized marketplace where members barter products or services. Some exchanges operate out of an office and other over the Internet. All barter exchanges are required to issue Form 1099-B, Proceeds from Broker and Barter Exchange Transactions.
2. Bartering income. Barter and trade dollars are the same as real dollars for tax purposes and must be reported on a tax return.
3. Tax implications. Bartering is taxable in the year it occurs. The tax rules may vary based on the type of bartering that takes place.
4. Reporting rules. How you report bartering on a tax return varies. If you are in a trade or business, you normally report it on Form 1040, Schedule C, Profit or Loss from Business.
Courtesy of the Internal Revenue Service- Issue Number: IRS Tax Tip 2014-26.
Visit our website at www.Hoorfarlaw.com.