James Bowen owns 100% of Bowen Corporation stock. Bowen is a calendar year, accrual method taxpayer. During

Question:

James Bowen owns 100% of Bowen Corporation stock. Bowen is a calendar year, accrual method taxpayer. During the current year, Bowen made three charitable contributions:

Bowen purchased the Bates stock three years ago for $30,000. Bowen holds a 28% interest, which it accounts for under GAAP using the equity method of accounting. The current carrying value for the Bates stock for book purposes is $47,300. Bowen will pay the pledge to the Girl Scouts by check on March 3 of next year. Bowen€™s taxable income for the current year before the charitable contributions deduction, dividends-received deduction, NOL deduction, and U.S. production activities deduction is $600,000. Your tax manager has asked you to prepare a memorandum explaining how these transactions are to be treated for tax purposes and for accounting purposes. Your manager has suggested that, at a minimum, you should consult the following resources:
€¢ IRC Sec. 170
€¢ Accounting Standards Codification (ASC) 720

GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...