Canary Corporation, an Accrual Method C Corporation, Uses the Calendar

Essay

Canary Corporation, an accrual method C corporation, uses the calendar year for tax purposes. Leticia, a cash method taxpayer, is both a shareholder of Canary and the corporation's CFO. On December 31, 2019, Canary has accrued a $75,000 bonus to Leticia. Describe the tax consequences of the bonus to Canary and to Leticia under the following independent situations.
a. Leticia owns 35% of Canary Corporation's stock and the corporation pays the bonus to
Leticia on February 4, 2020.
b. Leticia owns 75% of Canary Corporation's stock and the corporation pays the bonus to
Leticia on May 6, 2020.
c. Leticia owns 75% of Canary Corporation's stock and the corporation pays the bonus to
Leticia on April 7, 2020.