Joey is the president and sole stockholder of ABC Corporation, so Joey and ABC are related parties. In December, 2021, ABC authorizes a $20,000 bonus to Joey for his outstanding work during the year; ABC pays the bonus in January, 2022. Joey uses the cash method of accounting, and ABC uses the accrual method. Which of the following statements is correct?

Group of answer choices

ABC deducts the bonus in 2021.

ABC deducts the bonus in 2022.

ABC can deduct the bonus in either year they choose (2021 or 2022).

ABC can never deduct the bonus, because they are attempting to avoid tax.