Suppose that the IRS sends you a note saying that it wants to audit your business’s hiring of your children.

How would your records hold up?

Let’s visit Jeffrey Allen Dumond. At the time of his audit, he was operating State of the Art Vending, a business he acquired that included vending machines and a client list.

Basic Facts

Mr. Dumond claimed deductions for $8,400 in wages that he purportedly paid his children, ages 5 and 10.

During the year of this audit, the standard deduction was $4,200, and that eliminated ... Log in to view full article.