On December 31,2013,Flamingo,Inc.,a calendar year,accrual method C corporation,accrues a bonus of $50,000 to its president (a cash basis taxpayer),who owns 75% of the corporation's outstanding stock.The $50,000 bonus is paid to the president on February 1,2014.For Flamingo's 2013 Form 1120,the $50,000 bonus will be a subtraction item on Schedule M-1.

Question

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The $50,000 bonus is not deductible until it is paid in 2014, therefore it will not be a subtraction item on Schedule M-1 for the 2013 tax year.