On December 31,2010,Peregrine Corporation,an accrual method,calendar year taxpayer,accrued a performance bonus of $100,000 to Charles,a cash basis,calendar year taxpayer.Charles is president and sole shareholder of the corporation.When can Peregrine deduct the bonus?
A)In 2010,if the bonus was authorized by the Board of Directors and payment was made on or before March 15,2011.
B)In 2010,if payment was made on or before March 15,2011.
C)In 2011,if payment was made at any time during that year.
D)In 2011,but only if payment was made on or before March 15,2011.
E)None of the above.

Question

Quizplus · Accepted Answer

Peregrine, the accrual-method corporation, can deduct the bonus in 2011, the year in which Charles, the cash-basis taxpayer, includes the bonus in income.

On December 31,2010,Peregrine Corporation,an Accrual Method,calendar Year Taxpayer,accrued a Performance