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Michael is an excellent baseball player and works well with the younger RBI clients. Mike...

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Accounting

Michael is an excellent baseball player and works well with the younger RBI clients. Mike is considering hiring Michael to provide lessons during the busier periods, which occur just before baseball season and during baseball season. This period lasts about four months. Which of the following statements is correct?

A) Mike could hire Michael and pay him. However, he cannot deduct the expense on his return because Michael is a related party.

B) Mike could hire Michael and pay him. Assuming Michael worked 10 to 12 hours per week during the four-month busy season and was paid the same rate as the other coaches, Michael would have to file a federal income tax return (assume no other income).

C) Mike could hire Michael and pay him at the same rate as the other coaches. Mike would not have to withhold FICA from his paycheck, nor would he, as the employer, have to pay FICA on Michael's earnings, because Michael is under the age of 18 and working for his parents.

D) Mike could hire Michael and pay him. However, he could not be included in a qualified plan because he is under the age of 18.

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