In addition to these cumbersome tax requirements, barterers should also be aware of possible legal ramifications. To explain a potentially troublesome bartering situation, business litigation attorney Paul Stark set up a mock scenario: a plumber decides to barter his services with a Web developer.
"So, the plumber receives a benefit, which is the equivalent to income by getting free Web development for his plumbing business. But he has an expense that's going out, which is his plumbing services," said Stark. "As long as those are of equal value so on the fair market value--he does $500 worth of plumbing and he gets $500 of Web developing--there's not a lot of problems because it's for the business and it should essentially be a wash."
But issues start to arise when people begin trading their professional services for personal benefit.
"The problem comes ... when it's not a business service. In other words, the plumber gets his wife's fillings done. That's where you get into trouble because that is a benefit to the individual. At that point, that's where the liabilities can arise," explained Stark.
Which raises the question, when bartering your skills or hobbies outside of the confines of your business, how do you calculate the exact value of your time?
You can find the complete article at The Rise of the Barter Economy.
About the Author:
Paul Stark is an attorney at the Idaho Business Law Group, PLLC, located in Meridian, Idaho. You can find him at idahobusinesslawgroup.com, email at email@example.com or follow him @pstark on Twitter.