Question

Required information Problem 12-24 (LO 12-1) [The following information applies to the questions displayed below.] Jorgensen High Tech Inc. is a calendar-year, accrual-method taxpayer. At the end of year 1, Jorgensen accrued and deducted the following bonuses for certain employees for financial accounting purposes. • $62,800 for ken. • $47,100 for Jayne. $31,400 for Jill. • $15,700 for Justin. How much of the accrued bonuses can Jorgensen deduct in year 1 under the following alternative scenarios? (Leave no answer blank. Enter zero if applicable.) Problem 12-24 Part b b. Jorgensen paid the bonuses to the employees on April 1 of year 2. Deductible accrued bonuses Year 1

Answer 1

b	Calculation of deductible accrued bonuses year 2
	Employees name	Deductible in Year 1	Deductible in year 2
	Mr ken	0	$62800
	Mr. Jayne	0	$47100
	Mr. Jill	0	$31400
	Mr. Justin	0	$15700
	Total Deductible	0	$157000
	This amount is deductible in year 2 because it is not paid within 2 and half months
	of year 1
c	Calculation of deductible accrued bonuses year 2
	Employees name	Deductible in Year 1	Deductible in year 2
	Mr ken	0	$62800
	Mr. Jayne	0	$47100
	Mr. Jill	0	$31400
	Mr. Justin	0	$15700
	Total Deductible	0	$157000
	This amount is deductible in year 2 because these amount is not fixed at the
	end of year 1. These amount is not fixed because there was a condition that
	the employees will be eligible to receive the bonus only when they are employee
	on the date the bonus is paid.
d	As per Section 1.461 -1 (a) (2)(i) , if an employee leaves before the payment of
	bonus , the forfeited amount is reallocated to the other eligible employees.
	Thus the amount is bonus considered as fixed, even if any specific employee
	leaves on the payment date.
	Therefore, the total amount of bonus of $157000 may be deductible in year 1,
	as it is fixed and paid 2 and half month of year end