Question
In January 2019, Don and Steve each invested $100,000 cash to form a corporation to conduct business as a retail golf equipment store. On January
"In January 2019, Don and Steve each invested $100,000 cash to form a corporation to conduct business as a retail golf equipment store. On January 5, they paid Bill, an attorney, to draft the corporate charter, file the neces-sary forms with the state, and write the bylaws. They leased a store building and began to acquire inventory, furniture, display equipment, and office equipment in February. They hired a sales staff and clerical personnel in March and conducted training sessions during the month. They had a successful opening on April 1, and sales increased steadily throughout the summer. The weather turned cold in October, and all local golf courses closed by October 15, which resulted in a drastic decline in sales. Don and Steve expect business to be very good during the Christmas season and then to taper off significantly from January 1 through the end of February. The corporation accrued bonuses to Don and Steve on Decem-ber 31, payable on April 15 of the following year. The corporation made timely estimated tax payments throughout the year. The corporation hired a bookkeeper in February, but he does not know much about taxation. Don and Steve have retained you as a tax consultant and have asked you to identify the tax issues they should consider."
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