Troy, a cash basis taxpayer, is employed by Eagle Corporation, also a cash basis taxpayer. Troy is

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Troy, a cash basis taxpayer, is employed by Eagle Corporation, also a cash basis taxpayer. Troy is a full-time employee of the corporation and receives a salary of $60,000 per year. He also receives a bonus equal to 10% of all collections from clients he serviced during the year. Determine the tax consequences of the following events to the corporation and to Troy:
a. On December 31, 2017, Troy was visiting a customer. The customer gave Troy a $10,000 check payable to the corporation for appraisal services Troy performed during 2017. Troy did not deliver the check to the corporation until January 2018.

b. The facts are the same as in part (a), except that the corporation is an accrual basis taxpayer and Troy deposited the check on December 31, but the bank did not add the deposit to the corporation’s account until January 2018.
c. The facts are the same as in part (a), except that the customer told Troy to hold the check until January 2018 when the customer could make a bank deposit that would cover the check.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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South-Western Federal Taxation 2018 Comprehensive

ISBN: 9781337386005

41st Edition

Authors: David M. Maloney, William H. Hoffman, Jr., William A. Raabe, James C. Young

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