Mr. John Carre owns 67% of the stock of JC Inc. and is employed as the corporation's CEO. The corporation is a calendar year, accrual basis taxpayer. On December 14, 2013, the board of directors authorized a $45,000 year-end bonus for Mr. Carre, which was paid to him on February 1, 2014. In which year can JC Inc. deduct the bonus?

Question

Quizplus · Accepted Answer

JC Inc. can deduct the year-end bonus in the tax year in which it is paid. Since the bonus was paid on February 1, 2014, JC Inc. can deduct the bonus in 2014. The fact that Mr. Carre owns a majority of the stock and is employed as the CEO does not affect the deductibility of the bonus, as long as it meets the criteria for a deductible expense.

Mr John Carre Owns 67% of the Stock of JC