Businesses Barter Products or Services they Need. Bartering is trading one product or services for another.
Usually there is no Cash Exchange. IRS requires that Tax payers Report Fair Market Value (FMV) of the Product or Service received as Taxable Income. Also, Both Parties must report this Income. Some facts about Bartering :
1. Barter Exchanges - Organized market place for bartering Products and services. They are required to issue Form 1099-B for all Broker & Barter Exchange for transactions.
2. Barter Income - Barter Trade Dollars are same as cash dollars for tax reporting purposes. Report FMV all of the services received.
3. Tax Implications - Barter Income is Taxable in the year of transactions. Barterers may owe Income or Self Employment Tax.
4. Report Bartering Trade or Businesses Income on 1040 Schedule C after deducting Barter costs.
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