Discussion:C Corporation Accrued Year-End Bonuses

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Discussion Forum Index --> Tax Questions --> C Corporation Accrued Year-End Bonuses


Andyblue (talk|edits) said:

12 November 2005
Two questions regarding a 9/30 year-end C Corporation accruing year-end bonuses: Two brothers each own 50% of the corporation. Can we accrue bonuses to the 2 officer/owners if they are paid within 2 1/2 months (12/15)? Can we accrue bonuses to other key non-owner employees and pay these amounts 8-9 months in the future (say 5/15/06)? Can anyone provide a citation for answers to either question?

Micktax7 (talk|edits) said:

15 November 2005
Yes if 1. employee does not own more than 50% of stock. 2. bonus is properly accrued on books before end of current tax yr. 3. bonus is actually paid within first 2 1/2 mos of the following tax year. (FTC2d/FIN, Para H-3919;USTR para 4044.16;TG para 8577; tax desk para 27961) Research Inst of America.

Hope this helps.

Andyblue (talk|edits) said:

22 November 2005
I believe due to the Section 267 attribution rules, each brother is deemed to own 100% (because of attribution) and therefore you can't accrue the bonuses at all. I have not found any exception to this.

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