In 2020, Dargo Inc., a calendar year corporation, accrued a $75,000 year-end bonus payable to its communications director. Dargo and the director are not related parties. Dargo paid the bonus to the director on February 8, 2021. Dargo can deduct the bonus in 2020.

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According to the IRS, "an accrual basis taxpayer may deduct bonuses earned by employees in the current year if they are paid within 2 1/2 months after the end of that year (March 15 for a calendar year company). This deductible bonus amount would include amounts paid to related parties, but not amounts paid to a deferred compensation plan." Since the bonus was accrued in 2020 and paid within 2 1/2 months after the end of the year, Dargo can deduct the bonus in 2020.