Question

Big Homes Corporation is an accrual method calendar year taxpayer that manufactures and sells modular homes. This year for the first time Big Homes was forced to offer a rebate on the purchase of new homes. At year-end, Big Homes had paid $12,000 in rebates and was liable for an additional $7,500 in rebates to buyers. What amount of the rebates, if any, can Big Homes deduct this year?

Answer 1

What amount of the rebates, if any, can Big Homes deduct this year?

$19500

Step-by-step explanation:

$19,500 if this amount is not material, Big Homes could continue offering rebates in next sells, in addition expects to pay the accrued rebates before filing their tax return for this year.