Perle, a dentist, billed Wood $600 for dental services. Wood
paid Perle $200 cash and built a bookcase for Perle’s office in full
settlement of the bill. Wood sells comparable bookcases for
$350. What amount should Perle include in taxable income as a
result of this transaction?

(c) The requirement is to determine the amount that
Perle should include in taxable income as a result of performing
dental services for Wood. An exchange of services for property or
services is sometimes called bartering. A taxpayer must include
in income the amount of cash and the fair market value of property
or services received in exchange for the performance of services.
Here, Perle’s taxable income should include the $200 cash
and the bookcase with a comparable value of $350, a total of
$550.