A Business Bad Debt Gives Rise to an Ordinary Deduction

question 80

True/False

A business bad debt gives rise to an ordinary deduction while a nonbusiness bad debt is treated as a short-term capital loss.

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Definitions:

Credit Terms

Conditions under which credit will be extended to a borrower, including the amount of credit, interest rate, and repayment schedule.

FOB Shipping Point

A term used in shipping contracts to indicate that the buyer is responsible for the cost of transporting the goods from the shipping point.

Invoice Amount

The total sum of money requested by a vendor from a purchaser for goods delivered or services provided.

Merchandise

Goods that are bought and sold in any business, particularly in retail.