Bryon Operates a Consulting Business and He Usually Works Alone

question 77

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 $17,400, but Bryon paid Fred $28,600 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:

Investing Activities

Activities related to the acquisition and disposal of long-term assets and other investments not included in cash equivalents.

Comparative Balance Sheet

A financial statement that presents a company's financial position at different times, side by side, to allow for performance comparison.

Cash Dividends

Payments made by a company from its earnings to its shareholders in the form of cash.

Operating Activities

Comprises the primary activities of a business that relate to providing goods and services, generating revenue, and paying expenses.