Ivory Corporation, a Calendar Year, Accrual Method C Corporation, Has

question 106

Multiple Choice

Ivory Corporation, a calendar year, accrual method C corporation, has two cash method, calendar year shareholders who are unrelated to each other. Craig owns 55% of the stock, and Oscar owns the remaining 45%. During 2012, Ivory paid a salary of $200,000 to each shareholder. On December 31, 2012, Ivory accrued a bonus of $50,000 to each shareholder. Assuming that the bonuses are paid to the shareholders on February 1, 2013, compute Ivory Corporation's 2012 deduction for the above amounts.

• A)$0.
• B)$250,000.
• C)$400,000.
• D)$450,000.
• E)$500,000.

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Definitions:

Risk-Contemplated

A term related to considering or evaluating potential risks in decision-making or planning.

Comparative Negligence

A theory in tort law under which the liability for injuries resulting from negligent acts is shared by all parties who were negligent (including the injured party) on the basis of each person’s proportionate negligence.

Alleging Negligence

The act of accusing someone of failing to take proper care in doing something, leading to damage or injury.

Recovery

The process of obtaining something lost or owed, or the act of returning to a normal state of health, mind, or strength.