what are the tax implications for sweat equity in a business 
the irs considers sweat equity to be a form of income this means that if an employee receives part of their compensation in sweat equity that equity must be included in the employee s gross income and can be taxed as such 5the bottom linesweat equity refers to the value of work performed in lieu of payment homeowners can build sweat equity by making their own repairs rather than hiring a contractor in a business owners and employees may receive part of their compensation in sweat equity rather than a conventional salary 