Lupe, a cash basis taxpayer, owns 55% of the stock of Jasper Corporation, a calendar year accrual basis C corporation. On December 31, 2019, Jasper accrues a performance bonus of $100,000 to Lupe that it pays to him on January 15, 2020.
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Sutherland Company purchased machinery for $1,120,000 on January 1, 2014. Straight-line depreciation has been recorded based on a $70,000 salvage value and a 5-year useful life. The machinery was sold on May 1, 2018 at a gain of $21,000.
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