Which of the following would be a business bad debt if it were uncollectible?
A)A taxpayer loans his father $1,000 to start a business.
B)A taxpayer loans his son $10,000 to purchase a rental house.
C)A dentist, using the accrual basis of accounting, records income when it is earned and extends credit to a patient for services provided.
D)A taxpayer loans his brother $3,000 to purchase a truck for use in his brother's business.
E)None of these

Question

Quizplus · Accepted Answer

Only choice C involves a business transaction where the taxpayer has provided services and extended credit to a patient, making it a business bad debt if it becomes uncollectible. The other choices involve personal loans or loans for non-business purposes, which would not qualify as business bad debts.

Which of the Following Would Be a Business Bad Debt