In an IRS Legal Advice issued by Field Attorneys employee bonuses paid after year end (within 2 and ½ months) that are accrued as of the year-end could be deductible in the year paid instead of the year accrued.
Basically, if the amount is not fixed and the right to revoke or modify is present, the bonus accrued as of year-end would be deductible in the year paid.
This could remove a key deduction in your yearend tax planning!
If you are an accrual basis taxpayer and accrue employee bonuses at year end to be paid in the subsequent year, we recommend you consult with a tax advisor to make sure that your deduction is sustainable.
We at Gregory W. Beck, CPA offer a free ½ hour consultation. We would be glad to talk with you about this issue.
Reference: Legal Advice Issued by Field Attorneys 20134301F.