GAAP and tax accounting
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Gambali, a calendar-year, accrual basis S corporation, makes regular and substantial
contributions to local tax-exempt charitable organizations. On December 20, its board
of directors authorized a $175,000 contribution to the Calvin Home for Abused Children.
The corporation paid the contribution on January 25. Gambali's ordinary business
income for the year in which the contribution was authorized was $1,286,200.
Can it accrue a $175,000 separately stated charitable contribution for the year?
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Solution Summary
This solution explains the difference between GAAP and tax accounting using the example in the question.
Solution Preview
The answer to this question depends on the accounting method that is being used.
For GAAP accounting, the company can accrue the 175,000 separately as a charitable ...
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