Which of the Following Taxpayers Can Claim a Business Bad

question 103

Multiple Choice

Which of the following taxpayers can claim a business bad debt deduction for the current year?
I.Johnson is a dentist using the cash basis of accounting. He has accounts receivable from patients totaling $7,800 that are more than 90 days past due.
II.George owns and operates a sporting goods store and uses the accrual method of accounting. He has several customers who have owed him money for more than 10 months.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Extension of Time

An allowance by the IRS giving taxpayers extra time to file their tax returns beyond the original due date.

Married Filing Separately

A tax filing status that allows a married individual to file their taxes separately from their spouse.

Legally Married

The status of individuals who are united in a legal marriage recognized by their jurisdiction, affecting tax filing status.

D4 Follower

A term used in situational leadership to describe individuals who are highly competent and highly committed, requiring a delegating leadership style.