Our girls take gymnastics and dance yes but he failed to tell you his money is not paying for it. I worked out a deal with the owner whom happens to think of myself and the girls as family. I clean the studio during my free time to cover the expense so it is not costing us but my time.Actually, this SHOULD be costing you something other than your time. Since you have a cleaning business and the studio owner has a business doing dance and gymnastics classes, this is considered barter income for each of you. According to the IRS http://www.irs.gov/taxtopics/tc420.html (emphasis added)Bartering occurs when you exchange goods or services without exchanging money. An example of bartering is a plumber doing repair work for a dentist in exchange for dental services. You must include in gross income in the year of receipt the fair market value of goods and services received in exchange for goods or services you provide.Additionally, how much could you negotiated for the studio owner to pay you in cash, if your daughters weren't taking the classes? Since you are a small business owner, and these classes are costing time that you could be getting paid for (either from the studio owner or additional customers), the classes really are costing your family money that could be spent on paying down debt.AJ
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