Which of the Following Would Be a Business Bad Debt

question 2

Multiple Choice

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,who 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 the above.

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Definitions:

Married Filing Separately

A filing option for married partners that enables them to report their personal income, deductions, and exemptions separately on individual tax returns.

Modified AGI

Adjusted Gross Income with certain deductions and exclusions added back in, used to determine eligibility for certain tax benefits.

Adjusted Gross Income

An individual's total gross income minus specific deductions allowed by the IRS, used to determine tax liability.

Deduction

An expense that can be subtracted from gross income to reduce the taxable income.