How much income does amy recognize in year

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Question - Amy, a cash-basis taxpayer, received a salary of $100,000 during year 1, year 2, and year 3. Amy also was awarded a bonus of $30,000 that was accrued by Amy's employer, Vargus Corporation (an accrual-basis, calendar-year C Corporation), in December of year 1 but the bonus was not paid until March 31 of year 2. In December of year 2, Vargus accrued an additional $32,000 bonus that was paid to Amy in January of year 3.

a. How much income does Amy recognize in year 1, year 2, and year 3?

b. How much can Vargus Corporation take as a compensation deduction in year 1, year 2, and year 3?

Reference no: EM132088828

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