During the period X1 through X5, Overlook Corp., a calendar year accrual method taxpayer, manufactured and distributed food products that contained contaminants. In X7, a number of lawsuits were filed against Overlook alleging damages attributable to ingestion of these products. In settlement of the a lawsuit maintained by an individual, Overlook agrees to purchase an annuity contract that will provide annual payments to the individual beginning in X7 of $50,000 per year for 25 years. On July 15, X7, Overlook pays an unrelated life insurance company $533,739 for an annuity contract covering its obligation; Overlook maintains ownership of the contract and it is not transferred to the individual.

The amount of liability incurred by Overlook for the X7 year is ?

ABC, Inc., a calender year, accrual basis corporation, accrues a $100,000 bonus payable to its shareholder for its December 31, X1 financial statements. When can ABC deduct the $100,000 for tax?

Answer rating: 100% (QA)

For the first question The liability incurred by Overlook Corp in X7 is 50000 This is because the se... View the full answer