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How much can B Corporation deduct

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Problem - B Corporation, a calendar year-end, accrual basis taxpayer, is owned 75 percent by Bonnie, a cash basis taxpayer. On December 31, 2019, the corporation accrues interest of $4,000 on a loan from Bonnie and also accrues a $15,000 bonus to Bonnie. The bonus is paid to Bonnie on February 1, 2020; the interest is not paid until 2021. How much can B Corporation deduct on its 2019 tax return for these two expenses?

a. $0

b. $4,000

c. $15,000

d. $19,000

e. $12,000

Reference no: EM132675844

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