An Accrual Basis Taxpayer Accepts a Note Receivable from a Retail

question 8

True/False

An accrual basis taxpayer accepts a note receivable from a retail customer with a weak credit rating.The taxpayer immediately sells the note to a bank for less than the note's stated value.The taxpayer has an ordinary loss.

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Definitions:

Dockworker

An individual employed at a port or harbor to load, unload, secure, and transfer goods or materials between ships and dockside storage areas.

Plantation Owner

An individual who owns a large farm or estate, traditionally employing laborers to grow cash crops.