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G. B&W’s and Kelso’s Payments to Each Other
Kelso paid B&W $30,000 on October 31, 1996, $20,000 on
September 11, 1997, $25,000 on August 14, 1998, and $10,000 on
December 17, 1998.
Kelso began trying to collect the amount owed from B&W after
the audit of B&W (discussed at paragraph F, above) began, and
after the revenue agent spoke to Mr. Kelso and Blume in October
1996. B&W paid Kelso $10,000 on September 10, 1997, and
$52,157.69 on August 4, 1998, for the work done on the Badells’
residence and on B&W’s office building.
OPINION
A. Whether B&W Received Barter Income of $49,000 From Kelso in
Fiscal Year 1995
1. The Issue
We must decide whether, as respondent contends, B&W received
barter income of $49,000 from Kelso in fiscal year 1995 in the
form of roofing services Kelso provided for the Badell residence.
Gross income includes the fair market value of property or
services received in exchange for other services. See sec.
61(a); Baker v. Commissioner, 88 T.C. 1282, 1288 (1987); sec.
1.61-2(d)(1), Income Tax Regs. The fair market value of goods
and services is normally the amount charged by the providers of
the goods and services. See Rooney v. Commissioner, 88 T.C. 523,
527-528 (1987).
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