Bonus Deduction Timing. A client paid bonuses on February 20/2020 and he wants to deduct the payment in the year 2019. Question: How can I find the regulation for this question on TheTaxbook?
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see TTB 23-3 “Bonuses and vacation pay”
Also, see if U.S. Code ยง 461.General rule for taxable year of deduction is what you maybe looking for in The Tax Book Web LibraryLast edited by TAXNJ; 02-20-2020, 09:46 PM.Always cite your source for support to defend your opinion -
Good for him. If he wants to pay bonuses for 2019, pay them in 2019. To many things to attempt to fix even if you back dated the bonus checks... w2/w3/941/940/state unemployment.
Plus I bet most of his employees already filed tax returns. Could you imagine the pushback of all those amendments????
ChrisComment
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Wages are included on the W2 in the year paid. Deducting accrued bonuses paid in the following year doesn't create any sort of amendment situation.Plus I bet most of his employees already filed tax returns. Could you imagine the pushback of all those amendments????"Taxation is the price we pay for failing to build a civilized society." ~ Mark SkousenComment
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We do not know that the taxpayer is on the accrual basis for tax purposes.
For a cash-basis taxpayer, the bonus is deductible in the year paid. For accrual, the situation is more complicated. This article from 2014 has a good discussion of the issues, with some examples.
"You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard
"That's enough! When you didn't know what you were talking about, you really had something! [to Curly]" -Moe HowardComment
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Doesn't make a difference to the fact that W2s won't need amending.We do not know that the taxpayer is on the accrual basis for tax purposes.
"Taxation is the price we pay for failing to build a civilized society." ~ Mark SkousenComment
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