MrJohn Carre Owns 67% of the Stock of JC Inc

question 74

Multiple Choice

Mr.John Carre owns 67% of the stock of JC Inc.and is employed as the corporation's CEO.The corporation is a calendar year,accrual basis taxpayer.On December 14,2019,the board of directors authorized a $45,000 year-end bonus for Mr.Carre,which was paid to him on February 1,2020.In which year can JC Inc.deduct the bonus?

• A)2019.
• B)2020.
• C)JC Inc.can deduct only $14,850 (33%)of the bonus in 2019.
• D)The related party accrued expense is deductible in the year Mr.Carre includes the bonus payment in gross income.JC Inc.can never deduct the bonus.

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Definitions:

Time-Driven Activity-Based Costing

A refinement of activity-based costing that assigns costs based on the actual duration activities take, using predetermined time estimates.

Customer Service Department

A division of a business that handles queries, supports customers with problems or complaints, and provides information about products or services.

Customer Cost Analysis

A process of determining the total cost incurred by a business to serve a customer, including all direct and indirect expenses.

Time-Driven Activity-Based Costing

An approach to activity-based costing that assigns resource costs directly to products or services based on the estimated time required for each activity.