Alexander, TC Memo 2016-214

In this Memo The Tax Court Disallowed wages paid to a child for not being “reasonable”.

The taxpayer claimed a deduction of $6,315 of wages paid to his 10-year-old step-son. He said the payments were made related to a network marketing business and included taking out trash, vacumming, setting up chairs, and cleaning the pool.

The only Proof provided by the taxpayer was a handwriten ledger of the payments made. The court didn’t beleive it was contemporaneously prepared, or that it provided credible detail.

Additionally, the court felt the tasks provided weren’t ordinary and necsaary- and were more in-line with normal household chores.

Lastly, the taxpayer did not issue his son a w2 to support the cash payments made to his son.