united-states tax-law barter
Can one legally barter services if each party declares they are donating the service?
<p>I've read where the IRS will try to enforce the "real market value" of a service and require you to pay tax on it. I'm wondering how enforceable this is, and if you can get around it if its less than $500 in value or if you declare that it is a "donated service" on each side.</p>

<p><a href="https://www.irs.gov/uac/four-things-to-know-about-bartering-1" rel="nofollow">https://www.irs.gov/uac/four-things-to-know-about-bartering-1</a></p>

<p>Two people exchanging goods or services on a commercial basis and then pretending it was two gifts is tax evasion. It's not a gift. It's a commercial sale that you lie about by 'putting' a different 'label' on it.</p>

<p>Sometimes two people will give mutual gifts, e.g. if you come to my wedding: I give you dinner, you give me some kitchenware. Yet there's nothing commercial about it. So that's not income for either party.</p>

<p>However, if you're talking about two businesses making sales to each other, that is very much income, regardless of what you badge it.</p>

<p>If the services are less than $500 in value, they don't have to be reported.</p>

<p>As regarding "donations," there needs to be some kind of a "gift" element involved. The maximum excludable amount for gifts is $11,000.</p>

<p>I am not a lawyer or tax adviser, so see a person that is qualified in these matters.</p>
