Mr. Barley, an accountant, accepted a painting for his oﬃce from his client in lieu of payment of his customary fee of $400 for preparation of a tax return. He must include the $400 in income.

Question

Quizplus · Accepted Answer

When a taxpayer accepts property in lieu of payment for services rendered, the fair market value of the property received must be included in income for tax purposes. In this case, Mr. Barley received a painting, which has a fair market value of $400, so he must include this amount in his income.

Mr Barley, an Accountant, Accepted a Painting for His Oﬃce