Bart Owns 100% of the Stock of Octo Corporation,which Uses

question 139

Multiple Choice

Bart owns 100% of the stock of Octo Corporation,which uses the accrual method.Bart's sister Samantha,a cash method taxpayer,did some advertising work for Octo in November 2016.In December,Octo received a billing statement from Samantha for $5,000 and paid Samantha the $5,000 in January 2017.Samantha is a calendar year taxpayer.When may Octo deduct the $5,000?

• A)2016
• B)2017
• C)Either 2016 or 2017
• D)The expense is not deductible since Samantha is Bart's sister.

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Definitions:

Reverse Split

A reverse split is a consolidation of a company's existing share into fewer, proportionally more valuable shares.

Administrative Problems

Challenges or obstacles that occur in the management, organization, or operation of a business or any institutional setup.

Tax Basis

The value of an asset for tax purposes, used to calculate depreciation, amortization, and gains or losses on the sale of the asset.

Market Value

The present rate at which a product or service can be purchased or sold in the market.