Jones operates an upscale restaurant and he pays experienced cooks $39,000 per y

Question

Jones operates an upscale restaurant and he pays experienced cooks $39,000 per year. This year he hired his son as an apprentice cook. Jones agreed to pay his son $43,200 per year. Which of the following is a true statement about this transaction? Jones will be allowed to deduct $43.200 only if his son eventually develops into an expert cook. None of the choices are correct. Jones will be allowed to deduct $39.000 as compensation and another $4.200 can be deducted as an employee gift. O Jones will be allowed to accrue $43,200 only if he pays his son in cash. O Jones can only deduct $21,600 because an apprentice cook is only worth half as much as an experienced cook.

Explanation / Answer

Ans Jones will be allowed to deduct $ 39000 as compensation and another $ 4200 can be deducted as an employee gist.

$ 39000 is deductible as it is business expense and hence deductible.

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