Your Ask Joey ™ Answer

Is a bonus deductible on a tax return if paid in the following year for a C Corp?

For a C Corporation (C Corp), the company can deduct the bonus payment as long as the payment is made within 2.5 months from the company’s taxable year-end. The one exception is that if the bonus is for a shareholder, then the deduction would apply to the year that the bonus payment is made during.

Assuming a tax year-end date of December 31st, the corporation would be able to deduct bonuses for the Year 1 tax return as long as they are paid by March 15th, Year 2:

Back To All Questions

You might also be interested in...

  • Discontinued Operations on the FAR CPA Exam

    Overview of Discontinued Operations In financial reporting, discontinued operations refer to a component of a company’s core business or product line that have been divested or shut down. Discontinued operations will be reported (net of tax) separately from continuing operations on the income statement. The reason that discontinued operations are reported separately is so that...

  • Equity Method Excel Workbook

    If you would like to use the Excel workbook that was used to create the Universal CPA lecture on the equity method, please click the link below to download the Excel workbook: Equity Method Lecture Example

  • How Hard is the CPA Exam?

    So you’re thinking about taking the CPA exam? Whether you have a dream of becoming a tax advisor, feel as though you need public accounting experience, or just want to solidify your business acumen, the CPA license is one of the most prestigious and well respected licenses in the business world. The exam itself is...