Mr.Bearne paid $50,000 to a local spiritual healer and deducted the payment as a business expense of his sole proprietorship.The healer provided personal counseling to Mr.and Mrs.Bearne.Upon audit of the sole proprietorship's accounting records,the IRS agent disallowed the deduction by applying the:

Question

Quizplus · Accepted Answer

The Business purpose doctrine is applied here because the payment to the spiritual healer was for personal counseling, not for a legitimate business purpose, and thus not deductible as a business expense.

MrBearne Paid $50,000 to a Local Spiritual Healer and Deducted