Duck, an accrual basis corporation, sponsored a rock concert on December 29, 2017 Gross receipts were $300,000 The following expenses were incurred and paid as indicated Because the coliseum was not scheduled to be used again until January 15, the company with which Duck had contracted did not perf...

a Because Duck is an accrual basis taxpayer it may accrue and deduct in 2017 the ...

Duck, an accrual basis corporation, sponsored a rock concert on December 29, 2017. Gross receipts were $300,000.

Question:

Duck, an accrual basis corporation, sponsored a rock concert on December 29, 2017. Gross receipts were $300,000. The following expenses were incurred and paid as indicated:

Expense Payment Date December 21, 2017 Rental of coliseum Cost of goods sold: $ 25,000 December 30, 2017 December 30, 20

Because the coliseum was not scheduled to be used again until January 15, the company with which Duck had contracted did not perform the cleanup until January 8€“10, 2018.
a. Calculate Duck€™s net income from the concert for tax purposes for 2017.
b. Using the present value tables in Appendix H, what is the true cost to Duck if it had to defer the $100,000 deduction for the performers until 2018? Assume a 5% discount rate and a 25% marginal rate in 2017 and 2018.

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...