Ellen,a CPA,prepares a tax return for Frank,a farmer,in exchange for twenty bushels of rice.Since no cash changed hands,neither taxpayer reports income.

Question

Quizplus · Accepted Answer

Even though no cash changed hands, the fair market value of the twenty bushels of rice is still considered taxable income to Ellen. This is known as bartering and is subject to taxation under the IRS rules. Both Ellen and Frank should report the fair market value of the rice on their respective tax returns.

Ellen,a CPA,prepares a Tax Return for Frank,a Farmer,in Exchange for Twenty