Find the regulation that contains the special rule

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Reference no: EM131717478

Question -

Background: Many businesses will accrue an expense for GAAP purposes for employee bonuses earned during the year even though the bonus is not paid to the employee until the following year.  There is a special rule in the regulations that governs when the accrual may be deducted by the employer for tax purposes.

Assignment: Find the regulation that contains the special rule, and apply the rule to a situation in which an employer accrues a bonus during the year (assume the employer uses a calendar year-end) and pays the bonus in April of the following year.  Explain when the bonus is deductible by the employer for tax purposes using the rule in the regulation for support.

Reference no: EM131717478

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