Ellen,a CPA,prepares a tax return for Frank,a plumber,in exchange for installing a new sink.Since no cash changed hands,neither taxpayer is required to report any income.

Question

Quizplus · Accepted Answer

The exchange of services or goods is considered taxable income and must be reported on the tax return, even if no cash is involved. In this case, Ellen would need to report the value of the new sink as income and Frank would need to report the value of the tax preparation services as income.

Ellen,a CPA,prepares a Tax Return for Frank,a Plumber,in Exchange for Installing