In a recent article for GrowSmartBiz, contributor Maria Valdez Haubrich discussed how barter could affect a small business’ 2010 taxes.
“The IRS says income from barter is taxable in the year during which the transaction took place,” Valdez Haubrich wrote. “That means you must report the fair market value of the products or services you received in any 2010 barter transaction on your 2010 tax return.”
“In addition to this, you may also have to pay income tax, excise tax or self-employment taxes related to the barter activity. Finally, barter could result in capital gains, capital losses or nondeductible personal losses.”
Valdez Haubrich recommends small business owners document all barter arrangements and transactions, and suggests that joining a barter exchange can simplify tracking barter activity.
“Whichever method you choose to use-”informal or a barter exchange-”be sure you keep accurate records of all barter activity,” she wrote. “The IRS website has more information about barter, as well as links to all the barter-related tax forms you’ll need, resources and advice for tracking and documenting barter.”
Read the complete GrowSmartBiz article here.
Read about hot rod industry shops’ experiences with bartering in this article (http://www.theshopmag.com/business-resources/better-business-bartering-with-customers-suppliers/) from the June 2010 issue of Hotrod & Restoration.