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larry is a tax accountant and sheila is a hairdresser. larry prepares sheila's tax return for free and sheila agrees to style larry's hair six times for free in return for the tax return. the value of the tax return is approximately $300 and the hair styling work is approximately $300. a. how much of the $300 is includable income to larry? is income to larry because there gross income exception in the tax law for "barter" income. b. how much, if any, of the $300 is includable income to sheila?

Respuesta :

The Nature of the Gross Income is:-

a. How much of the $300 is includable income to Larry?

$300 is income to Larry because there is no gross income exception in the tax law for "barter" income.

b. How much, if any, of the $300 is includable income to Sheila?

$300

How can I file a barter income report?

Disclosing Barter Income

The fair market value of any items or services you obtain through bartering must be included in your gross income in the year that you receive them.  Typically, Schedule C (Form 1040), Profit or Loss from Business is where you declare this revenue (Sole Proprietorship).

How is revenue from barter taxed?

You could owe income tax, self-employment tax, employment tax, or even excise tax on your bartering income even if you didn't receive any actual cash since "barter dollars," the fair market worth of the items and services you got, are taxed the same way as cash.

To Know more about  Barter Income

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