Bartering for Property or Services

Bartering is an exchange for property or services. According to the IRS, you must include in your gross receipts, a the time received, the fair market value of property or services you receive in bartering. If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will accepted as the fair market value unless the value can be shown to be otherwise.





Example- 1 You are self-employed lawyer. You perform legal services for a client, a small corporation. In payment for your services for a client, you receive shares of stock in the corporation. You must include the fair market value of the shares in income.



Example-2 You are an artist and create a work of art to compensate your landlord for the rent-free use of your apartment. You must include the fair rental value of the apartment in your gross receipts. Your landlord must include the fair market value of the work of art in his or her rental income.



Example 3- You are a self-employed accountant. Both you and a house painter are members of a barter club, an organization that each year gives its members of a barter club, an organization that each year gives its members a directory of members and the services each member a directory of the member provides. Members get in touch with other members directly and bargain for the value of the services to be performed.



In return for accounting services provided for the house painter business, the house painter painted your home. You must include in gross receipts the fair market value of the services you received from the house painter. The house patiner must include the fair market value of your accounting services in his or her gross receipts.