Question
Write a tax memo for the following prompt: Movie Money Grandma operated a successful clothing manufacturing business. Her sons, Mel and Max, worked in the
Write a tax memo for the following prompt: Movie Money Grandma operated a successful clothing manufacturing business. Her sons, Mel and Max, worked in the business, but when she died the brothers discovered that Grandma's will left ownership of the 50/50 to the two brothers. Mel, the older brother believed that Mel's participation in the clothing business reputation. Mel was aware that Max would not be happy and might even bring a lawsuit. Mel made a deal with Max, In return for a payment of $150,000 per year, Mel agreed not to participate in management, he retained his right to dividends and to vote his stock. The agreement provides that the payments are not a salary or dividends. The brothers referred to the payments as "movie money." Mel has asked if the corporation can deduct the yearly payments to Max.
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