1. Steven Jacobs is a chiropractor who was arrested for attempting to bribe an IRS agent. During the course of the audit, Jacobs attempted to bribe the agent, rather than have him disallow payments made to two female patients for alleged inappropriate behavior. He was not arrested or convicted of a crime relating to this behavior.

The question is whether the payments to the two alleged patients are a deductible business expenses? The bribe is an irrelevant issue and should not be consider as indicative of whether he is guilty or innocent of the alleged inappropriate behavior. You can assume or not assume the patients signed non-disclosure agreements in return for the payments.

2. A taxpayer recently called our office and indicated she was interested in being a surrogate mother. Her idea was to carry the baby for a fee (not unusual). She would carry the fertilized egg for biological father and mother. I was very impressed by what a giving person she was. She thanked me, but indicated she was not that giving, since the fee was $50,000. She further indicated the $50,000 fee is tax free due to the pain and suffering she incurred delivering a baby. While I am a father of four, I cannot personally relate to the pain and suffering.

Would the payments be tax free?

When she is “out of work” could she collect unemployment? What about workers compensation?

Answer rating: 100% (QA)

Whether the payments to the two alleged patients are a deductible business expense The success of every business enterprise is depending on the observation of business guidelines Business law is one a... View the full answer