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Posted: October 20th, 2022
Cash Method Taxpayer Assignment
ABC Corporation, a calendar-year C corporation, has two unrelated cash method shareholders: Jack owns 51% of the stock, and Jill owns the remaining 49%. Each shareholder is employed by the corporation at an annual salary of $240,000. During 2019, ABC Corporation paid each shareholder-employee $220,000 of his or her annual salary, with the remaining $20,000 paid in January 2020. How much of the 2019 salaries for Jack and Jill is deductible by ABC Corporation in 2019 if the corporation is:
a. a cash method taxpayer
b. an accrual method taxpayer. .
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