McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 56

North Inc.is a calendar-year, accrual-basis taxpayer.At the end of the year 1, North accrued and deducted the following bonuses for certain employees for financial accounting purposes.
• $7,500 for Lisa Tanaka, a 30 percent shareholder.• $10,000 for Jared Zabaski, a 35 percent shareholder.• $12,500 for Helen Talanian, a 20 percent shareholder.• $5,000 for Steve Nielson, a 0 percent shareholder.Unless stated otherwise, assume these shareholders are unrelated.How much of the accrued bonuses can North Inc.deduct in year 1 under the following alternative scenarios?
a.North paid the bonuses to the employees on March 1 of year 2.b.North paid the bonuses to the employees on April 1 of year 2.c.North paid the bonuses to employees on March 1 of year 2 and Lisa and Jared are related to each other, so they are treated as owning each other's stock in North.d.North paid the bonuses to employees on March 1 of year 2 and Lisa and Helen are related to each other, so they are treated as owning each other's stock in North.