On December 19, 2020, Acme Inc., an accrual basis corporation, accrued $50,000 compensation expense for a routine year-end bonus payable to Mrs. Tabor, who is Acme's CFO. Acme paid the $50,000 to Mrs. Tabor on January 15, 2021. Which of the following statements is false?
A) If Mrs. Tabor owns no stock in Acme (i.e. is not a related party) , Acme can deduct the accrued expense in 2020.
B) Mrs. Tabor includes her $50,000 bonus in 2021 gross income.
C) If Mrs. Tabor owns 75 percent of Acme's stock (i.e. is a related party) , Acme can't deduct the expense until 2021.
D) If Mrs. Tabor owns 75 percent of Acme's stock (i.e. is a related party) , Acme can never deduct the bonus expense.
Correct Answer:
Verified
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