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Step 1
Calculate the total bartering income for the year based on the fair market value (FMV) of the goods and services received. Include all of the bartering income reported to you on Form 1099-B.
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Step 2
Report the total barter income from goods and services on Schedule C (Profit or Loss From Business) or on Schedule C-EZ (Net Profit From Business) of Form 1040. Include free rent you received in exchanged for goods or service.
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Step 3
Complete Schedule E (Supplemental Income and Loss) on Form 1040 if you are a landlord who received goods and services received in exchange for free rent.
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Step 4
Prepare Form 1099-B (Proceeds From Broker or Barter Exchange Transactions) for any bartering conducted with each specific person during the year. Send each person the applicable Form 1099-B, with a copy sent to the Internal Revenue Service (IRS), by January 31 of the following year.
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Step 5
Determine if any amounts of bartering income which you reported as business income on your Schedule C or Schedule C-EZ can also qualify as allowable business expenses because the goods or services received were used in the production of other business income. Deduct any amounts that qualify as business expenses on your Schedule C or Schedule C-EZ.
Comments
johnny231285 said
on 6/26/2009 I am bartering with http://www.barterquest.com and I was very concerned about the tax issue as well. I had no idea and already thought that bartering won't save me money but get me into tax trouble... fortunately barterquest has a really nice blog where I found that: http://blog.barterquest.com/category/barter-taxes/