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, 2015, the board of directors authorized a $45,000 year-end bonus for Mr. Carre, which was paid to him on February 1, 2016. In which year can JC Inc. deduct the bonus?

Question

Quizplus · Accepted Answer

JC Inc. can deduct the bonus in the year it was paid, which is 2016. Since the corporation is an accrual basis taxpayer, the fact that the bonus was authorized in 2015 does not matter. The key is when the bonus was paid, and in this case, it was paid in 2016.

Mr John Carre Owns 67% of the Stock of JC