For what? $1K of barter income or $6K?
$6K. Gross revenue. How could the landlord possibly know whether the tenant realized a profit or loss on the work?
The payer (landlord) has no idea what the tenant did or paid to provide the agreed-upon improvement, he only knows he agreed to a barter in an arm's-length transaction.
If the landlord was specifying how much the tenant could spend on materials, that would be more like an employer-employee relationship, and you don't want that.
How does he tell the IRS that that he only received $1K of
> income?
Schedule C-EZ. The recipient gets to document expenses, which result in taxable net profit.
Or, report it whatever way is correct for the facts and circumstances, and attach a statement explaining it.
-Mark Bole