A friend asks you for some advice since she knows you are taking this tax class. She has a son who just started college and he is pretty handy. He usually charges $15 per hour for his services but is starting to fall behind in his schoolwork. He has a friend who is willing to tutor him at $20 per hour. They have come to an agreement that her son and the tutor will exchange "handyman" services for tutoring services.
Explore the tax implications of this arrangement and whether the $5 per hour difference has any implications. Be sure to be specific and cite specific concepts.
Agreement is a mutual consent between two or more people who agrees to complete an obligation. It includes all the duties of both parties. There can be an oral or written agreement.
Answer and Explanation: 1
Barter means to exchange goods and services with each other. It doesn't mean an informal exchange of services of similar nature on a non-commercial basis as usually there is no cash transaction involved in it.
In the given case there is an agreement of exchanging "handyman" services for tutoring services this is a noncommercial transaction and therefore it will not be covered under barter income. So that's why there will be no tax implications on this transaction.
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fromChapter 6 / Lesson 7
Listening for agreement and disagreement can be tough if English isn't your first language. Here are some tips and practice questions to help you make it work.