Douglas and Sue, related parties, are landlord and tenant as to certain business property. If the IRS questions the amount of rent Sue is paying to Douglas, this is an illustration of the:

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The arm's length concept requires that the amount charged in transactions between related parties (like Douglas and Sue) should be the same as if the parties were unrelated, ensuring fairness and market value compliance. The IRS questioning the rent suggests they are evaluating if the transaction meets this standard.

Douglas and Sue, Related Parties, Are Landlord and Tenant as to Certain