Joshua Stark, a realtor, paid $5,000 to Shady Grove Apartments, Inc. as a referral fee for referring customers to him. One of his competitors complained to the local Realtor's Board that these payments were "kickbacks," deemed unethical conduct by the Board. fte Board agreed with his competitor, but noted that the payments were not illegal under federal law, and local laws against such fees have not been enforced for several years. ftus, the Board indicated that it would write a letter to Joshua explaining its view that the payments are unethical, but that there was really little else that either it or the competitor could do. Joshua countered to the Board that he would prefer not to make the payments, but that such payments are a common practice among realtors in the city, and that his business would suﬀer if he did not make them as well. Can Joshua deduct the payments on his federal income tax return?

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The Answer of Joshua Stark, a realtor, paid $5,000 to Shady Grove Apartments, Inc. as a referral fee for referring customers to him. One of his competitors complained to the local Realtor's Board that these payments were "kickbacks," deemed unethical conduct by the Board. fte Board agreed with his competitor, but noted that the payments were not illegal under federal law, and local laws against such fees have not been enforced for several years. ftus, the Board indicated that it would write a letter to Joshua explaining its view that the payments are unethical, but that there was really little else that either it or the competitor could do. Joshua countered to the Board that he would prefer not to make the payments, but that such payments are a common practice among realtors in the city, and that his business would suﬀer if he did not make them as well. Can Joshua deduct the payments on his federal income tax return?

Joshua Stark, a Realtor, Paid $5,000 to Shady Grove Apartments