On December 31, 2018, Lavender, Inc., an accrual basis C corporation, accrues a $50,000 bonus to Barry, its vice president and a 40% shareholder. Lavender pays the bonus to Barry, who is a cash basis taxpayer, on March 14, 2019. Lavender can deduct the bonus in 2019, the year in which it is included in Barry's gross income.

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The Answer of On December 31, 2018, Lavender, Inc., an accrual basis C corporation, accrues a $50,000 bonus to Barry, its vice president and a 40% shareholder. Lavender pays the bonus to Barry, who is a cash basis taxpayer, on March 14, 2019. Lavender can deduct the bonus in 2019, the year in which it is included in Barry's gross income.