The last project I did was as a barter. At first it started with talk of money being exchanged. Setting up a new webserver, installing some LAMP applications, etc. This was supposed to take a few hours, it really only took 2. My billable rate wasn't even worth the time it would take to do the paperwork (this would include getting a tax id and paying payroll tax). So I just asked for a slice on his ESX server. I'm happy, client is happy, a single penny wasn't spent by either of us.
If I'm reading the IRS page correctly. You only need to report it if you are bartering as a business. Since I didn't want to get involved with tax ids and 1099s I feel I fall outside the requirement. Plus the value of transaction was small enough that I don't need to declare it. But I'll see at next tax season.
