IRS is watching while you barter

Web posted March 11, 1998

 Better to barter?

By Wendy Grossman
Staff Writer

The IRS is still watching when you barter, even if you're not exchanging dollars. Here's what you need to do to make them happy:If you're trading through a barter exchange, you will need to fill out a 10-99B (B for barter) form. On your taxes, it looks like a bank account. If a member of a barter club trades his accounting services for someone painting his house, the accountant has to list the market value the house painting under his income and the painter has to list her regular fee as her income, according to IRS Publication 525, Taxable and Nontaxable Income.

``The IRS doesn't like individual trading between people,'' says Gary Dolan, president of the National Barter Network. ``They don't see the transaction, so they don't like it.''

The agency doesn't like it if you don't report it, says Anthony Burke, spokesman for the Georgia District of the Internal Revenue Service. But, if you report everything, the IRS is fine with bartering, he says.

It doesn't care if you trade your stereo for your neighbor's television, Mr. Burke says. You're not making a profit when you do that. But, if you're a car dealer and you swap cars with another dealer and you're going to sell them, you have to write that down.

You have to list your barters the same way you would cash. If a lawyer trades legal services for a company's stock, she has to list the market value of the shares in her 1040 income.

And then find something else to trade.