Bob Operates a Clothing Business Using the Accrual Method Over

question 20

Essay

Bob operates a clothing business using the accrual method over a calendar year. In October of last year, Bob contracted with his father, Tim, for consulting advice. Tim is a cash basis calendar year taxpayer and he billed Bob for $6,000 of consulting fees. This amount was comparable to amounts charged by other consultants (a reasonable amount). Bob paid $2,500 of the consulting fee by December 31st of last year, but the remaining $3,500 was not paid until January of this year. When can Bob deduct the consulting fee?

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Definitions:

IMC Efforts

Initiatives and activities focused on aligning and integrating all marketing communication tools, avenues, and sources within a company into a seamless program.

Sales Data

Information that pertains to the quantity of products sold and the revenue generated from these sales, often used to inform business decisions.

Noise

Unwanted or disruptive sound, but in communication, it refers to any external interference that affects the clarity or accuracy of the message transmission.

IMC Process

Stands for Integrated Marketing Communications Process, which coordinates and integrates all marketing communication tools, avenues, and sources within a company into a seamless program to maximize the impact on consumers.