# bartering for land



## JJ Grandits (Nov 10, 2002)

I hope this isn't a question thats been covered before. I own a landscape business and have been talking to one of my clients about bartering 2 acres for my landscape services. Has anyone done this? I would like to know how it turned out and what I should look out for or expect.


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## blufford (Nov 23, 2004)

The first time I heard, "Oh, we don't need no laywer for this," would be a deal ender for this. How and who will decide that the work agreed upon is completed and if there is disagreement how will you move the deal forward.


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## Mickie3 (Aug 28, 2010)

blufford said:


> The first time I heard, "Oh, we don't need no laywer for this," would be a deal ender for this. How and who will decide that the work agreed upon is completed and if there is disagreement how will you move the deal forward.


Amen!

Also, there is no tax advantage to this, so why not keep it separate deals and things on a level playing field? (Note: barters *are* taxable income, per the IRS.)


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## francismilker (Jan 12, 2006)

I'm with Mickie3. Unless the price per acre is cheaper by bartering it, I'd make it two separate deals or go into it with some type of legal binding contract to protect both of you. Notice: A typed out gentlemen's agreement that is signed, dated, and notarized by all parties doesn't always hold up in court as a binding contract. A realize going to an attorney may be extreme but make sure the contract you agree upon is worth the paper it's written on.


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## fordy (Sep 13, 2003)

JJ Grandits said:


> I hope this isn't a question thats been covered before. I own a landscape business and have been talking to one of my clients about bartering 2 acres for my landscape services. Has anyone done this? I would like to know how it turned out and what I should look out for or expect.



...............bartering , on both sides of the transaction , is taxable , for you , you'd be required too value your services at full market value and he would be required too report the sale at fair market value as well . His sale , may have the advantage of being a longterm capital gain depending upon his holding period . 
...............OTOH , he can gift too you up too $12,000 of value without any tax consequences for either side . So , I'd find a very smart CPA and let him\her configure the transaction that does the least amount of damage too either side . , fordy


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## Mickie3 (Aug 28, 2010)

fordy said:


> ...............bartering , on both sides of the transaction , is taxable , for you , you'd be required too value your services at full market value and he would be required too report the sale at fair market value as well . His sale , may have the advantage of being a longterm capital gain depending upon his holding period .
> ...............OTOH , he can gift too you up too $12,000 of value without any tax consequences for either side . So , I'd find a very smart CPA and let him\her configure the transaction that does the least amount of damage too either side . , fordy


Huh? A gift?  I would take a look at Section 20 of the IRS codes (penalties and interest) before I would do something that is that obvious a scam (read: attempt at tax fraud.) Besides, how would you keep the guy from reneging on the "gift" once you had given him your "gift" (services.) Write a contract? That would make it sooooo easy for an IRS and state tax agent to prove fraud, they would love that one. 

On the other hand, the suggestion to talk with a tax-knowledgeable CPA (not all are, most specialize in auditing, not taxes) could be a good investment to keep from paying any more taxes than is required, although I am not sure there is any way the OP will save anything as it appears to be a standard payment transaction. A tax-attorney could be a good person to consult as well, as they could also advise on any contractual implications if a barter deal is done (at least I would trust the one I know, YMMV.)


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## fordy (Sep 13, 2003)

Mickie3 said:


> Huh? A gift?  I would take a look at Section 20 of the IRS codes (penalties and interest) before I would do something that is that obvious a scam (read: attempt at tax fraud.) Besides, how would you keep the guy from reneging on the "gift" once you had given him your "gift" (services.) Write a contract? That would make it sooooo easy for an IRS and state tax agent to prove fraud, they would love that one.
> 
> On the other hand, the suggestion to talk with a tax-knowledgeable CPA (not all are, most specialize in auditing, not taxes) could be a good investment to keep from paying any more taxes than is required, although I am not sure there is any way the OP will save anything as it appears to be a standard payment transaction. A tax-attorney could be a good person to consult as well, as they could also advise on any contractual implications if a barter deal is done (at least I would trust the one I know, YMMV.)


................If I have 5 acres of land with an FMV of 12,000 per acre and I decide too gift it over too a friend I can transfer title too 1 acre per year with NO tax consequences on either side of the transaction until I have transferred all 5 acres into the that persons ownership . 
................The problem occurs when the essence of the transaction is , in fact for labor received and , not , reported ! , fordy


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## marytx (Dec 4, 2002)

Well, I hate to be the one to say it, but it sounds like a scam to get free landscaping services. I'm going to have a hard time believing he's going to give you good title to two acres of his land. There is too much between doing the work and getting that deed.


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## JJ Grandits (Nov 10, 2002)

Actually it was my idea. This would be an above board deal, lawyers and all. We have yet to agree on the value of the land and the amount of service to be provided and for how long. I think it could be a win-win situation if I make it happen. I was just wondering if anyone has tried it before and how it worked out.


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## Treewhisper (Nov 24, 2010)

He could easily back out of the deal after you've done the work because he didnt like the end result. If its not written down then everything is too subjective.


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## JJ Grandits (Nov 10, 2002)

Trust me. My contracts would be iron clad. This would be the same as any other purchase of property except for the way it was payed for.


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