5

I am wondering what the tax implications are for me and for the company I want to work with if instead of signing on as their employee, or even a contractor, I do some work for them (programming) for a short term, and in return I get a computer from them.

Could the business count that as an expense? Do I have to record that as income? Any other insights here would be appreciated!

6

Such activity is normally referred to as bartering income.

From the IRS site -

You must include in gross income in the year of receipt the fair market value of goods or services received from bartering. Generally, you report this income on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or Form 1040, Schedule C-EZ (PDF), Net Profit from Business (Sole Proprietorship). If you failed to report this income, correct your return by filing a Form 1040X (PDF), Amended U.S. Individual Income Tax Return. Refer to Topic 308 and Amended Returns for information on filing an amended return.

4

Yes, the business can count that as an expense but you will need to count that as income because a computer = money.

2

Bartering is a tricky discussion. Yes, it definitely applies when you are self-employed and do a job that you would charge anyone else for, but what if you are helping a friend in your spare time? If you receive something in exchange, the value of the item you received would be your income, but what if you don't receive anything in exchange?

If the company bought a computer that they loan to you to do occasional work for them, there's no reason you couldn't take the computer home and have that company retain ownership of the property. They could still expense the depreciation of the computer without giving it to you. If it were a car though, you would have to count mileage for personal use as income. What if you exchange occasional tech support for the use of an empty desk and Internet connection? As long as they aren't renting desks for money to others, there's probably no additional marginal cost to them if they allow you to use the space, so the fair market value question breaks down.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .