Canary Corporation, an Accrual Method C Corporation, Uses the Calendar

question 121

Essay

Canary Corporation, an accrual method C corporation, uses the calendar year for tax purposes. Leticia, a cash method taxpayer, is both a shareholder of Canary and the corporation's CFO. On December 31, 2019, Canary has accrued a $75,000 bonus to Leticia. Describe the tax consequences of the bonus to Canary and to Leticia under the following independent situations.
a. Leticia owns 35% of Canary Corporation's stock and the corporation pays the bonus to
Leticia on February 4, 2020.
b. Leticia owns 75% of Canary Corporation's stock and the corporation pays the bonus to
Leticia on May 6, 2020.
c. Leticia owns 75% of Canary Corporation's stock and the corporation pays the bonus to
Leticia on April 7, 2020.

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Definitions:

Unequal Wages

The disparity in earnings between individuals, often based on factors such as gender, ethnicity, age, or job role, instead of merit or performance.

Sexual Harassment

Unwelcome sexual advances, requests for sexual favors, and other verbal or physical harassment of a sexual nature.

#MeToo Movement

A social movement against sexual abuse and sexual harassment where people publicize allegations of sex crimes committed by powerful and/or prominent men.

Gender Expectations

Societal norms and beliefs about appropriate roles, behaviors, activities, and attributes for men and women.