XYZ Corporation pays $600,000 in salary to its president, Jimmy, during Year 1. XYZ also pays $300,000 in salary to Fred, Jimmys 16-year-old son, for maintenance services. The fair value of the maintenance services Fred provides is $18,000, and the fair value of the services Jimmy provides is $900,000. Which statement about XYZs deductions for salary paid is correct?

Group of answer choices

XYZ can deduct $18,000 of the salary paid to Fred.

XYZ can deduct the $300,000 paid to Fred, since that is the salary actually paid.

XYZ cannot deduct any of the salary paid to Fred.

XYZ must deduct $600,000 salary in Year 1 and $300,000 in Year 2.