Fundamentals of Taxation
A Business Bad Debt Is Treated as a Short-Term Capital
A business bad debt is treated as a short-term capital loss and can be deducted only when it becomes completely worthless.
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For a cash-basis taxpayer, any account receivable that is not collected can be written off as a bad debt.
When business property is lost in a fire, storm, shipwreck, theft, or other casualty, the taxpayer normally receives a capital loss deduction.
If an activity is characterized as a hobby, expenses are deductible only to the extent of income from the hobby, subject to certain ordering rules.
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