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So I did a web site for a friend of mine, who builds bicycles. We are doing a trade of a web site for a bike. Basically it was meant to be an even barter trade.
Question: is there any easy way for him to write off the expense on his taxes? If he 'pays' me in cash, I have to pay taxes, and then if I turn around and 'buy' a bike from him, he has to pay taxes on that 'purchase'.
Thoughts? Should he just fill out a 1099-misc (I think that's the correct form) and write off the bike as a miscellaneous expense? Or does he write it off as a 'promotional item'? Or do we just not bother with the tax thing period and call it a trade?
Technically barter is considered income to IRS. If does a write off and gets audited, it has a possibility of being traced back.
But I don't report my barters... so I wouldn't report it.
only report handjobs
seriously though, what are you going to pay them, a fraction of a bike? maybe give them a hub or the front wheel.
Technically I'm only getting the frame, and it's not like it's a ton of cash that I'd owe the government. But I thought I'd ask people with a bit more experience in this area.
i think the point is, if he writes it off, he doesnt pay taxes on the value of it and you do. Either way, someone is paying the tax on it.
if he doesnt mind not writing it off, better for you.
Otherwise, you can just give him cash to cover the taxes and not file anything. If you want to be real official, he can write off the retail value of it, and you have to claim it as 1099 income.
I'm confused? Unless the cost of the frame/website is less than what would be saved in taxes, why is he going to write-off anything?
- We agreed on a even trade.skwiotsmith
- right. but not paying you in monetary form AND seeking a write-off seems to be pushing it, no?moural
- i'd just swap the website for the frame and zip it.moural
- I see your point, but I'm just trying to figure things out. I've never been asked about something like this before.skwiotsmith