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Therefore the 19x1 consolidated return gain is 0 in

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Unformatted text preview: ecker CPA Review, PassMaster Questions Lecture: Regulation 3 $50,000 accrual is deductible as compensation expense. The additional $10,000 bonus paid on March 1, 19X3 is also deductible in 19X2, even though it was not accrued at year-end 19X2. Therefore, the total compensation is $600,000 + $10,000, or $610,000. Choice "a" is incorrect. The additional $10,000 of bonus that was paid by March 15 of the next year is deductible in year 19X2. Choice "c" is incorrect. Both the $50,000 accrual and the additional $10,000 bonus paid is deductible, assuming it is paid by March 15, 19X3. Choice "d" is incorrect. This answer assumes that the candidate is subtracting the entire $60,000 of bonus paid by March 15 from deductible compensation expense. This is incorrect because both the $50,000 accrual and the additional $10,000 paid by March 15, 19X3 are deductible. CPA-02155 Type1 M/C A-D Corr Ans: D PM#76 R 3-01 58. CPA-02155 PII May 93 #49 Page 33 Potter Corp. and Sly Corp. file consolidated tax returns. In January 19X1, Potter sold land, w...
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