Feb 022017

NSTP. Vancouver, Wa.

Brent and Lynette McMinn owned a refurbishing business. The business was very successful and averaged $8,750,000 in sales per year. For the years in question, the McMinn’s claimed deductions for their four children of nearly $200,000. Wages must be reasonable.

When an amount deducted as wages involves a familial relationship, the IRS and the courts closely scrutinize the transaction to determine whether there is a bona fide employer employee relationship and whether payments were made for services actually performed. The court said the bonuses were not reasonable.

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