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Hello!
My client has an LLC. He does collectible sales.
He has done some transactions with trading. Client had to trade in an item for another one, and later on in the same year he has sold that item for an amount of $. I am confused what to put as a purchase in this situation?
I wanted to make sure and do all the best calculation to input the right $ amount on schedule C, so in the end I can figure if he had an earning or a loss.
Appreciate every response and suggestions.
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Barter is the same as money. Cash, chickens, items in trade, all are treated the same. It's all got a value.
Your client "bought" the traded in item for some value that he set for it. That is his Cost for selling it later. He still "sold" the original item he had on sale, under non-cash conditions.
The IRS has guidance for this. You can google:
irs barter
https://www.irs.gov/taxtopics/tc420
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