Taj Operates a Sole Proprietorship,maintaining the Business Records Under the Cash-Basis

question 85

Multiple Choice

Taj operates a sole proprietorship,maintaining the business records under the cash-basis method of accounting.Taj performs services for a client and sends the client a bill for $12,000.Six months later,before payment is received by Taj,the client files bankruptcy,with no assets available for unsecured creditors such as Taj.Taj will deduct

• A)$12,000 ordinary loss.
• B)$3,000 long-term capital loss.
• C)$3,000 short-term capital loss.
• D)$0.