Issue link: http://cp.revolio.com/i/142672
the business of barter By Phyllis Hanlon Like many massage therapists starting a business, Enrique Ramirez, spa director and founder of Face to Face NYC Carla Joyce, LMT and registered yoga teacher in Cranston, Rhode Island, began trading while still a student more than a decade ago. Now that she has her own practice, she continues to barter for massage, but has broadened her exchanges to Revenue Service (IRS) attorneys, notes that "barter is fully taxable," adding that the most prevalent form occurs in the service industry and is largely unreported. He calls the situation "an underground economy." include personal training sessions, acupuncture, chiropractic, reflexology, architectural services, gym memberships, and reduced rent. "It's a good opportunity to get a service or product that might be a little out of reach otherwise," she says. "It's also a good way to experience a different type of bodywork, develop a professional relationship, and learn new techniques." Reporting barter is a fairly straightforward tax issue, according to Roger Lirely, professor of accounting at Western Carolina University, who has written extensively about tax matters. "Both parties to a barter have taxable income—it is generally assumed that the transaction does not take place until both parties have agreed that the exchange is equal in value, so the amount of income can be determined by reference to either the value of what was given up or the value of what was received, whichever is more readily determinable," Lirely says. "In practice, barter exchanges are seldom reported by the parties Day Spa, struggled to stay afloat in the early going. With approximately five clients at the outset, his budget didn't allow for advertising or marketing expenses. To help get the word out about his business without breaking the bank, Ramirez resorted to a time-tested technique. "I began trading massage services for a small ad in a local magazine and also with a friend who served as my marketing director," Ramirez says. This arrangement enabled him to build his business without waiting for his savings account to grow or having to secure a large business loan. Common Practice Since before written history and the invention of a common currency, barter—the exchange of services and goods for the same—has been a common practice and continues to flourish today. Many massage therapists can testify to the benefits of barter from personal experience. Taxing Matters As beneficial as barter can be, those who engage in the practice often overlook or ignore one important aspect. Sandy Botkin, CPA, esquire, and former trainer of Internal