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 31,2010,Canary has accrued a $100,000 bonus to Leticia.Describe the tax consequences of the bonus to Canary and to Leticia under the following independent situations.
Definitions:
Compound
A substance made up of two or more different elements that are chemically bonded together.
Free Radicals
Highly reactive molecules with unpaired electrons, capable of causing cellular damage and contributing to disease processes.
Electrons
Subatomic particles with a negative charge, orbiting the nucleus of an atom and involved in chemical reactions and electricity.
Temperature
An indicator of how hot or cold an object or substance is, compared to a baseline value.
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