Martha,an Accrual-Method Taxpayer,has an Accounting Practice

question 60

Multiple Choice

Martha,an accrual-method taxpayer,has an accounting practice.In 2013,she performs tax analyses for Arnold and sends him an invoice for $10,000.In 2014,Martha sells her practice and all accounts to David.Arnold's debt becomes worthless that year after David has purchased the practice.The result is

• A)Martha deducts a nonbusiness bad debt in 2014.
• B)Martha deducts a business bad debt in 2014.
• C)David deducts a business bad debt in 2014.
• D)David deducts a nonbusiness bad debt in 2014.

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Definitions:

Prejudice

A preconceived opinion or judgment towards people, groups, or subjects, often based on stereotypes, without factual knowledge or experience.

Discrimination

In psychology, the ability to differentiate between stimuli or situations; more broadly, unfair treatment of people based on their group memberships.

Chauvinism

Excessive or prejudiced loyalty or support for one's own cause, group, or gender, often disregarding reason or fairness.

Group Cohesiveness

The degree to which members of a group are attracted to each other and motivated to stay in the group.