Bryon Operates a Consulting Business and He Usually Works Alone

question 83

Essay

Bryon operates a consulting business and he usually works alone. However, during the summer Bryon will sometimes hire undergraduate students to collect data for his projects. This past summer Bryon hired Fred, the son of a prominent businessman, for a part-time summer job. The summer job usually pays about $17,500, but Bryon paid Fred $29,000 to gain favor with Fred's father. What amount of Fred's summer wages can Bryon deduct for tax purposes? Bryon is on the cash method and calendar year.

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Definitions:

Leasing Exposure Draft

A preliminary standard or guideline released for public comment that addresses accounting for lease transactions.

Capital Leases

Leasing arrangements that are considered to possess the economic characteristics of asset ownership, typically leading to the lease asset being recorded on the balance sheet.

Capital Lease

A lease agreement that transfers substantially all the risks and rewards of ownership of an asset to the lessee, effectively treated as an asset purchase for accounting purposes.

Lessee

An individual or entity that leases or rents property or equipment from another entity, known as the lessor.