A nightclub, a cash basis taxpayer, desperately wanted to secure the singing services of Johnny Cash (also
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Question:
- How should the nightclub account for the expense of Johnny Cash’s performance in its financial statements for the year 2021?
- What are the tax implications for Johnny Cash receiving a promissory note in December 2021 but getting paid in January 2022?
- Is the issuance of an unsecured, assignable promissory note considered income for Johnny Cash in the year 2021 or 2022?
- How does the fair market value (FMV) of the promissory note impact the recording of the transaction on the nightclub’s books?
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