Canary Corporation,an Accrual Method C Corporation,uses the Calendar Year for Tax

question 100

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 31,2015,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 3,2016.
b.​
Leticia owns 75% of Canary Corporation's stock and the corporation pays the bonus to Leticia on April 4,2016.
c.​
Leticia owns 75% of Canary Corporation's stock and the corporation pays the bonus to Leticia on February 3,2016.

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Definitions:

Conductor

A material or object that allows the flow of electrical current in one or more directions.

Magnetic Flux Density

Magnetic flux density is a measure of the strength and direction of a magnetic field at a particular point, expressed in teslas (T), indicating how dense the field lines are in that area.

Induced Voltage

A voltage generated in a conductor due to its motion in a magnetic field or due to a changing magnetic field around it.

Ampere-turns

A unit of magnetomotive force represented by the product of current (in amperes) and the number of turns in a coil, influencing the strength of the magnetic field generated.