Duck, an accrual basis corporation, sponsored a rock concert on December 29, 2022. Gross receipts were $300,000. The following expenses were incurred and paid as indicated:

Because the coliseum was not scheduled to be used again until January 15, the company with which Duck had contracted did not perform the cleanup until January 8–10, 2023.

a. Calculate Duck’s net income from the concert for tax purposes for 2022.

b. Using the present value tables in Appendix E, what is the true cost to Duck if it had to defer the $100,000 deduction for the performers until 2023? Assume a 5% discount rate and a 21% marginal tax rate in 2022 and 2023.

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Expense Rental of coliseum Cost of goods sold: Food Souvenirs Performers Cleaning of coliseum $ 25,000 30,000 60,000 100,000 10,000 Payment Date December 21, 2022 December 30, 2022 December 30, 2022 January 5, 2023 February 1, 2023