Related Parties

[tacks]

I read over the rules. And it seems that one business may deduct expenses -- consulting fees -- paid to a related party provided that the fees are reasonable/market rate and services were in deed provided. I understand that a 1099-misc should be filed for fees INXS of 600 dollars. (And the related party receiving income should, of course, recognize it.)

Are there any guides, publications and/or court cases that i might refer to when accounting for this? Specific requirements for substantiating expense on the payer's side?

thanks

[ChEAr$]

I read over the rules. And it seems that one business may deduct expenses -- consulting fees -- paid to a related party provided that the fees are reasonable/market rate and services were in deed provided. I understand that a 1099-misc should be filed for fees INXS of 600 dollars. (And the related party receiving income should, of course, recognize it.)

Are there any guides, publications and/or court cases that i might refer to when accounting for this? Specific requirements for substantiating expense on the payer's side?

thanks

Sunstantiation is pretty simple; canceled check or receipt signed by recipient.

As to any requirement that consulting fees be at reasonable market rate, that
would only apply to any rate deemed excessive. A lower than average rate
is entirely justifiable.

[tacks]

thanks ChEAr$,

That's more or less what i thought but getting a second opinion to confirm is greatly appreciated!