Jones Operates an Upscale Restaurant and He Pays Experienced Cooks

question 86

Multiple Choice

Jones operates an upscale restaurant and he pays experienced cooks $35,000 per year. This year, he hired his son as an apprentice cook. Jones agreed to pay his son $40,000 per year. Which of the following is a true statement about this transaction?

• A)Jones will be allowed to deduct $40,000 only if his son eventually develops into an expert cook.
• B)Jones will be allowed to accrue $40,000 only if he pays his son in cash.
• C)Jones will be allowed to deduct $35,000 as compensation and another $5,000 can be deducted as an employee gift.
• D)Jones is not entitled to any business deduction until the son is an experienced cook.
• E)None of the choices are true.

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Definitions:

Dominant Strategy

In game theory, a strategy that is the best choice for a player, no matter what the other players do.

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Individuals or entities involved in the illegal trade of controlled substances.

Confess

To admit or acknowledge something that is true, especially something personal or sensitive.

Good Quality Product

A product that meets or exceeds the expectations of its users in terms of performance, durability, and reliability.