Ajax Computer Company is an accrual method calendar year taxpayer. Ajax has never advertised in the...
Ajax Computer Company is an accrual method calendar year taxpayer. Ajax has never advertised in the national media prior to this year. In November of this year, however, Ajax paid $1 million for television advertising time during a "super" sporting event scheduled to take place in early February of next year. In addition, in November of this year the company paid $500,000 for advertising time during a professional golf tournament which will occur once in April of next year. Neither of these payments qualify as recurring expenses. What amount of these payments, if any, can Ajax deduct this year?
Homework Answers
ANSWER
Answer Is $1 million
Explanation
Deduct $1 million because under the 3½month rule payment for a service qualifies as economic performance when actual performance is expected within 3½ months of the date of payment.
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Ajax Computer Company is an accrual method calendar year
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Problem 5-17 (LO. 2, 3) Broadbill Corporation, a calendar year C corporation, has two unrelated cash...
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Broadbill Corporation, a calendar year C corporation, has two unrelated cash method shareholders: Marcia owns 51% of the stock, and Zack owns the remaining 49%. Each shareholder is employed by the corporation at an annual salary of $240,000. During 2019, Broadbill paid each shareholder-employee $220,000 of his or her annual salary, with the remaining $20,000 paid in January 2020. Determine how much of the 2019 salaries for Marcia and Zack is deductible by Broadbill in 2019 if the corporation is...
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