Ordinary and necessary??

[LCP]

That's quite a hurdle really! There are alot of legitimate expenses that are not necessary and extraordinary ideas are often pretty darn good.

Anyway..... here is my issue:

Small family run business employees their teenage children who do some legitimate work but are clearly paid more than the market value.

Owner argues that part of the reason is to get and keep them interested in hopes they may decide to make it their career. Nothing wrong with an expenditure that would promote business continuity is there??

[Bees Knees]

Ordinary and necessary is not the issue. The IRS looks closely at family businesses shifting income to their lower tax bracket kids. The wage has to be market wage for legit work performed. Otherwise IRS could disallow some or all of the wage.

[Burke]

Bees Knees is correct. The IRS is not going to buy the guy's argument to justify higher than usual wages.