If a friend of mine who is a professional carpenter does some work for
me around my house, do I have to pay taxes on this if I bought him
pizza "in exchange” for his services?

I googled barter taxable and got 121,000 hits, more information than
you'll ever want to know.

On May 15, 11:12 pm, "Archmedes" <m...@privacy.net> wrote:

I'm hoping to find some legal reference as to why I would or would not
have to pay taxes on the value of the work in question.

On May 15, 10:57 pm, "parl...@nospam.nospam" <parl...@gmail.com>
wrote:

I'd like to ask this question again with a few variations:

1.      If a friend of mine who is a carpenter by profession does some work
on my house and I buy him a pizza “in exchange” for his services has
an accounting transaction just occurred? Do we each have to pay taxes
on the value of this exchange?

2.      What if that person is my dad?

3.      What if it’s an uncle?  An in-law?  A second cousin twice removed?

4.      What if instead of a pizza I bought him passage on a cruise?

5.      What if I gave him an old car that I owned outright?

6.      What if I just gave him a hug?

7.      What if I gave him a piece of paper that says “I promise to mow
your lawn.”?

8.      What if I gave him a piece of paper that says “I promise to give
you $1,000 when I sell my house?”

9.      What if I fixed this person’s computer while they were working on
my house?

10.     What if I gave this gave this person a password to my Online Role-
Playing Game and let them take over my identity which I had
painstakingly earned 10,000,000 power points and could do all sorts of
cool tricks that only 10,000,000 power points can buy?

11.     And finally, what if I didn’t give this person anything for their
services but later that same year it just so happened that I ended up
doing one or all of the above?

No joke.  I’m really interested in understanding the answers to these
questions. All of the above have actually happened in my life, except
#10 because I don’t play role-playing games…at least not enough to
earn 10,000,000 power points.

That's a sound idea...just plug in the variation term in combination
with the original terms.  For example, using barter taxable IOU drops
the hits from 121,000 to 3,730.  You'll probably find some court
decisions in there as well.  Good hunting!

If a friend of mine who is a professional carpenter does some work for
me around my house, do I have to pay taxes on this if I bought him
pizza "in exchange” for his services?

You don't seem to understand what barter, which is taxable income, is.
Barter would be your friend doing your carpentry in exchange for you, as a
professional lawn care provider, doing his lawn for a season.  It's taxable
income to you both.

What you describe is not barter, it's a friend doing a friend a favor.  It's
taxable income to neither of you.

--
Phil Marti
Clarksburg, MD

On the assumption that you are asking about income taxes, you wouldn't
have any income but the carpenter would.  Therefore, you owe no income
taxes.

What?  If the exchange results in income to at least one of the parties,
why can't a favor be income.  The pizza is income to the carpenter.

On May 16, 2:23 am, "Phil Marti" <prm20...@verizon.net> wrote:

Phil, thank you for making an intelligent reply.

Understanding what barter means and how an exchange of products or
services is considered taxable is the very reason for my posting.

Let's assume the following true statments:

1. My father owns a construction company and agrees to have his crew
over to my house and do a bunch of work...work that he would probably
be able to charge between $4,000 and $5,000 to someone else.

2. I own a professional web development company and agree to create a
website for my dad...work that I would probably be able to charge
between $4,000 and $5,000 to someone else.

My questions:

a. Does the above scenario represent a barter relationship between
myself and my father?

b. Do I have to pay taxes on the $4,000 to $5,000 that I received from
him?

c. Does he have to pay taxes on the $4,000 to $5,000 that he received
from me?

If the answer to any question a, b, or c above is "yes", does it
change if:

1. My dad simply agreed to do the work on my house in exchange for a
hug from his loving son.

2. I simply agreed to do the work for my dad in exchange for a hug
from my loving father.

Thanks, Ryan

On May 16, 9:40 am, nat <esen...@tx.rr.com> wrote:

nat, can you please further explain why I would have no income in this
situation and why the carpenter would.  If some of the repairs on my
house involved purchasing $500 worth of material, would I not have
received a monetary benefit?  All the carpetner got from me was a
couple slices of pizza. Are you saying that he is legally obligated to
report his benefit as income while I am not?

Thanks, Ryan

Understanding what barter means and how an exchange of products or
services is considered taxable is the very reason for my posting.

Let's assume the following true statments:

1. My father owns a construction company and agrees to have his crew
over to my house and do a bunch of work...work that he would probably
be able to charge between $4,000 and $5,000 to someone else.

2. I own a professional web development company and agree to create a
website for my dad...work that I would probably be able to charge
between $4,000 and $5,000 to someone else.

My questions:

a. Does the above scenario represent a barter relationship between
myself and my father?

b. Do I have to pay taxes on the $4,000 to $5,000 that I received from
him?

c. Does he have to pay taxes on the $4,000 to $5,000 that he received
from me?

Yes on all fronts.

If the answer to any question a, b, or c above is "yes", does it
change if:

1. My dad simply agreed to do the work on my house in exchange for a
hug from his loving son.

2. I simply agreed to do the work for my dad in exchange for a hug
from my loving father.

No on both fronts.  Substance trumps the story you gin up to try to get
around tax law.

--
Phil Marti
Clarksburg, MD

So, we disagree.  And yet the world spins on.

--
Phil Marti
Clarksburg, MD