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larry is a tax accountant and sheila is a hairdresser. larry prepares sheila's tax return for free and sheila agrees to style larry's hair six times for free in return for the tax return. the value of the tax return is approximately $300 and the hair styling work is approximately $300. a. how much of the $300 is includable income to larry? is income to larry because there gross income exception in the tax law for "barter" income. b. how much, if any, of the $300 is includable income to sheila?

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a) $300 is income to Larry because there is no gross income exception in the tax law for "barter" income

b) $300 is includable income to Sheila

(A) Larry will be liable for paying taxes on the whole $300. Gross income is defined under tax law as all profits from all sources. As a result, the amount of hair styling labor received in exchange for the service will be equivalent to Sheila's taxable income. There is no mention of an exception to the law's exclusion of barter revenue.

(b) Sheila will be liable for paying taxes on the whole $300. Gross income is defined under tax law as all profits from all sources. Since Sheila provided Larry with her hairstyling skills, the amount of the tax return will be seen as Sheila's equal income. The legislation does not provide any exceptions to the exclusion of barter revenue.

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