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Chuck Dalton owns 2% of the outstanding stock of Music Corporation and 80% of Trumpet...

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Accounting

Chuck Dalton owns 2% of the outstanding stock of Music Corporation and 80% of Trumpet Partnership, which owns 90% of the outstanding stock of Music Corporation. Chuck is a cash-basis taxpayer, and Music Corporation is an accrual-basis taxpayer. Both use the calendar tax year. Chuck performed services for Music Corporation. His wages were accrued and paid as follows:
Accrued $12,000 June 10, Year 1; paid September 3, Year 2.
Accrued $4,000 August 6, Year 1; paid October 1, Year 2.
Accrued $7,000 October 15, Year 2; paid January 28, Year 3.
What amount can Music Corporation deduct as wages to Chuck on its tax return for Year 2?
A.
$0
B.
$23,000
C.
$16,000
D.
$7,000

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