Gerald,a Cash Basis Taxpayer,owns 70% of the Stock of Black

Essay

Gerald,a cash basis taxpayer,owns 70% of the stock of Black Corporation,a calendar year,accrual basis C corporation.On December 31,2017,Black accrued a bonus of $80,000 to Gerald,and paid the bonus to Gerald on January 5,2018.When does Gerald report the bonus,and when does Black Corporation deduct the bonus? Would your answers change if Gerald was a 40% shareholder of Black?