I’ve always told people they need to report and document their barter sales and expenses like they would any other sale or expense, but today I found a compelling article written by a CPA that confirms my beliefs.

Here’s how to avoid an audit:
Document everything Barter agreements work the same way as cash agreements, Rice explains, and need to be documented in kind.
“Report your barter income on your tax return and label it ‘barter revenue,’” he recommends. “Full disclosure is always best. Your barter income is taxable. Make sure to report what you would have received in cash.”
For example, if I bartered $100 worth of my CPA services for $100 worth of window washing for his office, he would need to report $100 to the IRS because that is the amount he would have been paid if the transaction wasn’t a barter.
“Report your barter income on your revenue line,” he advises.

More info at http://www.onmilwaukee.com/myOMC/blog/show/4764

audit, barter, IRS, taxes