1.

The board of directors of ABC Corp. meets on December 15^th, Year 1, and approves the immediate payment of a $2.5 million cash bonus to Ms. Executive. She (Ms. Executive) goes immediately to ABCs treasurer and asks that her bonus check not be prepared and delivered to her until January 2, Year 2. The treasurer says Well, I was just about to prepare it, but okay!.

As ABC Corp.s Tax Director, what advice do you give to ABCs treasurer regarding when the $2.5 million should be reported to the IRS i.e., as part of Ms. Executives Year 1 pay or her Year 2 pay, and why?