Jones Operates an Upscale Restaurant and He Pays Experienced Cooks

question 7

Multiple Choice

Jones operates an upscale restaurant and he pays experienced cooks $38,000 per year. This year, he hired his son as an apprentice cook. Jones agreed to pay his son $42,400 per year. Which of the following is a true statement about this transaction?

• A)Jones will be allowed to deduct $42,400 only if his son eventually develops into an expert cook.
• B)Jones will be allowed to accrue $42,400 only if he pays his son in cash.
• C)Jones will be allowed to deduct $38,000 as compensation and another $4,400 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.

---

Definitions:

Cranium

The part of the skull that encloses the brain.

Pharyngeal Pouches

Embryonic structures in vertebrates that may develop into various parts of the face, neck, and respiratory system.

Notochord

A flexible, rod-shaped structure found in the embryonic stage of all chordates that provides skeletal support and defines the primitive axis of the embryo.

Dorsal Hollow Nerve Cord

A distinctive feature of chordates, this is a nerve cord found along the back or dorsal side of the organism.