Press Room: Article
The Tax Treatment of Bonuses Presents Audit Exposure to Businesses
A company’s treatment of bonus accruals may create IRS audit exposure for accrual method taxpayers.
Under IRC Sec. 446, bonuses must meet an “all events test” to be accrued at year-end. The all events test requires that the bonus obligation be a fixed legal obligation at year end and the amount of that bonus obligation be determinable with reasonable accuracy…