ordinary and necessary business expenditure deduction
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Joshua hired his brothers firm to provide accounting services, to his business. During the current year, Michael paid his brothers firm $82,000 for services even though other firms were willing to provide the same services for $40,000. How much of this expenditure, if any, is deductible as an ordinary and necessary business expenditure?
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Solution Summary
This solution provides an analysis of a given accounting scenario. The scenario involves a business owner who hires his brother to provide service at a cost above market, and the solution explains what of these expenses are deductible.
Solution Preview
Since, according to the question, the generally accepted expense for these particular accounting services is $40,000, that is all that is deductible. If, however, the service provided ...
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