BZD, a calendar year corporation, made the following year-end accruals for 2022 financial statement purposes. In each

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BZD, a calendar year corporation, made the following year-end accruals for 2022 financial statement purposes. In each case, determine how much of the accrued expense is deductible on BZD’s 2022 federal tax return.

a. $55,000 expense and $55,000 liability for unpaid December salaries. BZD paid the entire liability to its employees before the end of January 2023.

b. $40,000 expense and $40,000 liability for the CEO’s 2022 bonus. BZD paid $20,000 to the CEO on March 1, 2023, and the remaining $20,000 on May 1, 2023. BZD and the CEO are not related parties.

c. $219,700 expense and $219,700 liability for accumulated vacation pay. No employees took vacation between January 1 and March 15, 2023.

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Principles Of Taxation For Business And Investment Planning 2023

ISBN: 9781264229741

26th Edition

Authors: Sally Jones, Shelley Rhoades-Catanach, Sandra Callaghan, Thomas Kubick

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