Maureen is a cash-basis, calendar-year taxpayer and works as a sales manager for Teton Corporation, an accrual basis, calendar-year corporation. Tetons president and 100 percent owner, Tom, (also a cash-basis taxpayer) authorizes a $25,000 bonus for Maureen and a $100,000 bonus for himself on December 22, year 1. The company pays his bonus on February 2, but fails to pay Maureens bonus until March 30, year 2.

a. How much income do Maureen and Tom recognize in years 1 and 2? Please show your work and explain your calculations.

b. What is Tetons compensation deduction for the bonus in years 1 and 2? Please show your work and explain your calculations.