Bartering is the trading of one product or service for another. The value of products or services from bartering is normally taxable income. The fair market value of the property or services received in bartering must be included in income. If property or services were exchanged through a barter exchange, Form 1099-B, or a substitute form should be issued to the taxpayer. The amount shown on the form (Box 3) is generally reported as other income on the form or schedule that the income is associated with.
- If the taxpayer is a sole proprietor and the bartering activity or income is related to their business, the income would be reported on a Schedule C.
- If the bartering activity or income was related to rental activities or royalties, it would be reported on a Schedule E.
- If the bartering activity or income was related to farming activities, it would be reported on a Schedule F.
- Finally, if the bartering activity or income was related to a personal activity and not related to any business activity or investment in which the taxpayer has an interest, it is considered Other Income.
NOTE: This is a guide on entering Form 1099-B into the TaxSlayer Pro program. This is not intended as tax advice.
Instructions for Form 1099-B, Proceeds From Broker and Barter Exchange Transactions
Publication 525, Taxable and Nontaxable Income