Does your business barter? Don’t overlook the tax consequences. When businesses exchange goods or services instead of cash, the IRS generally treats the transaction as if each party sold what it provided and purchased what it received at fair market value. The fair market value of goods, services or barter credits received is generally taxable income and must be properly reported. Business expenses paid through barter may still be deductible, and if an asset was received, the value received becomes the tax basis of the asset. Businesses using barter clubs may receive Form 1099-B, “Proceeds From Broker and Barter Exchange Transactions.” Keep detailed records. Have questions? We can help.
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