Ordinary and necessary business expenses are deductible only to the extent they are reasonable in amount....
Ordinary and necessary business expenses are deductible only to the extent they are reasonable in amount. Describe a circumstance where reasonableness is likely to be questioned by the IRS.
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Answer:-
Reasonableness is an issue of fact and circumstance, and extravagance is difficult to determine because of the subjectivity and multitude of factors involved in determining price. Reasonableness is most likely to be an issue when a payment is made to a related individual or the taxpayer enjoys some personal benefit incidental to the expenditure.
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Ordinary and necessary business expenses are deductible only to
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