You can barter retail to retail or wholesale to wholesale. Barter works best for service companies with low overhead and high margins. Barter really helps when you can trade excess time/inventory for goods and services you really need, especially when cash is in short supply.

       "Bartering is an exchange of property or services. You must include in your income, at the time received, the fair market value of property or services you receive in bartering. If you exchange services with another person and you both have agreed ahead of time as to the value of the services, that value will be accepted as fair market value unless the value can be shown to be otherwise." IRS Publication 525

       The effect of bartering wholesale to wholesale is that the taxable exchange is taxed on a lower value. If you bill your time as an attorney at $200/hr (which includes overhead, other costs and is not discounted) and the retail value of the lumber you need is $10,000, you could be taxed on $10,000 for exchanging fifty hours of time for the lumber. At a 25% tax bracket, your taxes would be $2500. On the otherhand, you could agree to a wholesale value of $50/hr in exchange for a wholesale value on the lumber of $2500 and your taxes would be $625. The important issue here is the wholesale value must be reasonable. If so you meet the IRS condition of fair market value. It is not to your advantage to neglect to declare barter income.