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$49.$Sally is an attorney who computes her taxable income using

the cash method of accounting. Sage Corporation, owned $40\%$ by Sally$$s brother, $40\%$ by

her cousin, and $20\%$ by her grandmother, uses the accrual method of accounting. Sally is a

calendar$-$year taxpayer, whereas Sage Corporation$$s fiscal year ends on January $31.$ During

$2023,$ Sally does some consulting work for Sage Corporation for a fee of $$10,000.$ The

work is completed on December $15$ and Sage receives Sally$$s invoice on that date. For each

of the following assumptions, answer the following questions: During which tax year must

Sally report the income? During which tax year must Sage Corporation deduct the expense?

a$.$ The payment to Sally is made on December $27,2023.$

b$.$ The payment to Sally is made on January $12,2024.$

c$.$ The payment to Sally is made on February $3,2024$

$54.$ During the current year, Kim incurs the following expenses

with respect to her beachfront condominium in Hawaii:

Expense Items Amount

Insurance $ $500$

Repairs and maintenance $700$

Interest on mortgage $3,000$

Property taxes $1,000$

Utilities $800$

Depreciation $$8,000$

During the current year, Kim used the condominium $20$ days for vacation. She rented it

out for a total of $60$ days, generating a total gross income of $$9,100.$

a$.$ What are the total amounts of deductions for and from AGI that Kim may take with

respect to the condominium using the IRS allocation method?

b$.$ What is the effect on the basis of the condominium?

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