“Do you need an invoice for your taxes?” the farmer asked. The buyer grabbed her produce and handed over the cash in a practiced movement, shaking her head no. But the interaction would be different with a local chef buying a cartful of food for a local restaurant. Invoices and even checks often feature prominently at the market, and the farmers may need to cater to such big buyers and what they need. The local farmers' market is atwitter with interactions, and some got me thinking about how much tax law is at play and what the IRS would say.
Bartering
How about the frequently interaction between vendors, where one farmer trades some of his crop for something else? Apples for corn, pastries for tomatoes or lettuce, and so on. Income is income, whether you get it in cash or in kind. Whether one-on-one or with multiple parties, the IRS says trading one product or service for another is taxable bartering. The IRS taxes it. In fact, you name the swap, it’s income to both sides just like cash. Both are supposed to report the fair market value of goods or services on their tax returns. It may not seem fair, but when you barter, the IRS wants its cut.