Restrictions on deductions for payments to specified persons require market value and electronic payment compliance or risk disallowance. Payments to specified persons may be disallowed to the extent they are excessive compared with fair market value, business needs or benefit to the assessee; a broad definition of specified persons and a 20% test for substantial interest apply. Non electronic payments in excess of a prescribed cash limit in a day are not deductible and certain subsequent cash payments previously deducted may be taxed as business income; a higher ceiling is prescribed for goods carriage payments and limited exceptions may be prescribed.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Restrictions on deductions for payments to specified persons require market value and electronic payment compliance or risk disallowance.
Payments to specified persons may be disallowed to the extent they are excessive compared with fair market value, business needs or benefit to the assessee; a broad definition of specified persons and a 20% test for substantial interest apply. Non electronic payments in excess of a prescribed cash limit in a day are not deductible and certain subsequent cash payments previously deducted may be taxed as business income; a higher ceiling is prescribed for goods carriage payments and limited exceptions may be prescribed.
Full Summary is available for active users!
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
of 
Join Channel
TaxTMI 
