Andy paid Steve's engineering firm $200,000 for services even though other firms were willing to provide the same services for $30,000. Andy owns 60% of Company B and Steve owns 20% of B while the other 20% is owned by unrelated parties. Company B is an accrual basis, C-Corporation.

What tax issues do you see with the payment and would you classify the payment as deductible or non deductible for company B?