Taxpayers can hire their children to work in their businesses but the children must hold legitimate jobs. In one case, a consultant and his wife’s estate weren’t entitled to business deductions for payments to “assistants,” who were the couple’s children and a grandchild. The payments were for alleged reimbursement or compensation for services provided in connection with consulting activities. Notably, there was no documentary evidence substantiating certain payments. Copies of negotiated checks to the “assistants” from an account used for personal purposes had no notation as to the purpose of payment and there was no evidence to show one child did any work for her father. (TC Memo 2022-70) Call or visit our website for more information! www.mjscpa.com/
