1. North Inc. is a calendar-year, accrual-basis taxpayer. At the end of the year 1, North accrued and deducted the following bonuses for certain employees for financial accounting purposes.

• $7,500 for Lisa Tanaka, a 30 percent shareholder.
• $10,000 for Jared Zabaski, a 35 percent shareholder.
• $11,500 for Helen Talanian, a 20 percent shareholder.
• $6,000 for Steve Nielson, a 0 percent shareholder.

These shareholders are unrelated. North paid the bonuses to the employees on April 1 of year 2. How much of the accrued bonuses can North Inc. deduct in year 1?

2. North Inc. is a calendar-year, accrual-basis taxpayer. At the end of the year 1, North accrued and deducted the following bonuses for certain employees for financial accounting purposes.

Lisa and Jared are related parties, treated as owning each others stock in North. The other shareholders are unrelated. North paid the bonuses to the employees on March 1 of year 2. How much of the accrued bonuses can North Inc. deduct in year 1?

• $7,500 for Lisa Tanaka, a 30 percent shareholder.
• $10,000 for Jared Zabaski, a 35 percent shareholder.
• $11,500 for Helen Talanian, a 20 percent shareholder.
• $6,000 for Steve Nielson, a 0 percent shareholder.