Susanne Watson is an employee and sole-shareholder of Klaxon. Klaxon is a calendar-year company which uses the accrual method of accounting. On December 30, 2012, Klaxon awarded Susanne a bonus of $30,000 based on the company's 2011 year-end proﬁt. fte bonus was reasonable, ordinary and necessary. It was paid on February 11, 2013. In what year can Klaxon deduct the bonus it paid to Susanne? Susanne is a calendar-year, cash method taxpayer.

Question

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the company must deduct the bonus in the same year that the employee includes it in income

Susanne Watson Is an Employee and Sole-Shareholder of Klaxon