@HOPE2 Please go back and reread my post very carefully, and you will see that "inappropriate expenses" were never mentioned, nor was it inferred. What I was referring to was the fact that the IRS uses percentage/ratio analysis techniques that may lead to an audit, even if the figure(s) are completely legitimate. For example, years ago at a seminar a tax professional mentioned that one of his business clients was audited because the IRS felt that there should be more in cash sales based on the 1099-K information (and the industry/profession that the business was in). His client did not have much in cash sales because his client only had a few customers who would almost always pay via credit. But the IRS did not know that before his client was chosen for audit. Have a nice day.