USA Tax Implications on In-Store Credit Purchases

[Esanne]

Hello everyone!

I have a children’s secondhand store and we buy a ton of inventory everyday. In return I offer in store credit. I spoke with an Enrolled Agent about how to treat the “sales” when trade credit is spent. I feel like I am bartering some of my clothes and items for some of theirs, but getting the better deal. They told me I need to count the sale towards my overall merchandise sales and pay tax on it. If this is truly the case, I will go bankrupt since I do about $15,000 in store credit “sales” a month and only $8-12,000 in actual cash/credit card sales. Anyone have experience with this? Thank you!

 

[kirby]

Yes barter income is taxable, but remember that income is the excess of barter revenue over barter expense. So if you receive barter goods and the agreement is you have received $100, then when they redeem for other goods valued at $100, there was no INCOME. You had $100 barter revenue and $100 barter expense. Locate a local accountant who gets this and can help with the details.