Respuesta :
Since the bonuses were not paid within two half months of the year's end, Jorgensen cannot deduct any money from the first year's earnings. In year 2, he may subtract his $100,000 bonus.
Give a brief account on accrual-method taxpayer.
Regardless of when payment is received, you typically record income under the accrual method in the tax year it is earned. Regardless of when payment is received, expenses are written off in the tax year they are incurred. Those that compute their income on an accrual basis do so when they really earn it or became entitled to it. Their deductions are calculated based on the dates those debts were accrued, not necessarily when they were paid. For the foreign tax credit on all upcoming tax returns, the taxpayer must utilize the accrual technique. Unless the taxpayer is on cash basis and elects the accrual method to calculate the foreign tax credit, taxpayers on the accrual basis should be sent to a professional tax preparer or military legal aid officer for assistance.
To solve the question :
a) Paid the bonuses to employees on March,1 of year 2
Employees Name Deductible in year 1 Deductible in year 2
Mr. Ken $40,000
Mr. Jayne $30,000
Mr. Jill $20,000
Mr. Justin $10,000
Total deductible $100,000
Given that the bonuses were paid out in under two months, Jorgensen may deduct $100,000 in year 1.
b) Paid the bonuses to employees on April, 1 of year 2
Employees Name Deductible in year 1 Deductible in year 2
Mr. Ken $40,000
Mr. Jayne$ $30,000
Mr. Jill $20,000
Mr. Justin $10,000
Total deductible $100,000
Since the bonuses were not paid within two half months of the year's end, Jorgensen cannot deduct any money from the first year's earnings. In year 2, he may subtract his $100,000 bonus.
c) Calculate of deducible amount of bonus
Employees Name Deductible in year 1 Deductible in year 2
Mr. Ken $40,000
Mr. Jayne$ $30,000
Mr. Jill $20,000
Mr. Justin $10,000
Total deductible $100,000
Only those employees who are still working on the bonus payment date are eligible to receive bonuses, therefore bonus amounts are not thought of as fixed. Jorgensen may deduct $100,000 in year 2 because the bonus wasn't established at the conclusion of year 1.
d) The fortified sum is redistributed to other eligible employees if an employee quits before the bonus is paid. Thus, the bonus amount given by Jorgensen is regarded as set, even if a certain employee leaves on the day of payment. Therefore, a bonus of $100,000 may be deducted over the course of a year if it is established and paid within two and a half months of the year's end.
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