Slick Stan owns all the stock of Slick, Inc. He is also the sole officer of the corporation.

a$.$ The corporation shows a profit of $$100,000$ for the year. Is Stan taxable on this money when earned by the corporation?

b$.$ Suppose the corporation is a cash basis, calendar year taxpayer. If$,$ on December $31,20$X$0,$ the corporation accrues on its books a bonus payable to Stan, does Stan have income?

c$.$ Suppose the corporation was an accrual basis corporation $($briefly review Sec. $267($a$)(2).$

$17.$ Carlo Strong entered into a One Hundred Million Dollar contract with the New York Yankees. He is obligated to play $4$ years, but will be paid over $8$ years $($half of year one's payment will be paid in year $5,$ etc.$).$  Carlo would like the assurance that the money will be there in $8$ years, accordingly he demands that the money be placed with a New York Trust Company in escrow. Discuss the implications.

$18.$ Albert sells stock to Sarah on December $27,20$X$0.$  Albert requests that the $$10,000$ payment be escrowed until January $5,20$X$1,$ when the proceeds will be distributed to him. Sarah wants to close the transaction by December $31,20$X$0.$ When does Albert recognize income? Suppose the account is not transferable or assignable?

$19.$ Sam worked as salesperson for Highlife Records. In April of $20$X$0$ Sam questioned his commissions. Soon afterwards Sam was fired. On Aug $1,20$X$0$ Sam received a severance check for $$15,000$ which was accompanied with a letter stating that it in full payment for services rendered. Since Sam did not agree with the amount of the check, believing he was entitled to more, he did not cash the check and instead retained counsel. In March $20$X$1$ Sam$’$s claim was settled for $$34,000.$  When must Sam report income?

$20.$ Dave Slyme, a salesman for Chaos Corporation, is in arrears in his alimony payments to his former wife, Mildred. Mildred has subpoenaed his $20$X$0$ income tax returns for their court date scheduled on March $31,20$X$1.$ Slyme is scheduled to receive a substantial bonus from Chaos on December $31,20$X$0$ because he has already met all of his sales goals for $20$X$0,$ but has requested Chaos to defer payment of both the bonus and his November $-$ December salary until $20$X$1,$ so that his $20$X$0$ tax return will show that he cannot afford the alimony payments. He does so on November $30,20$X$0.$