A taxpayer wishes to take a deduction for a worthless debt.Without proper documentation,the taxpayer faces the risk that the IRS will assert that

Question

Quizplus · Accepted Answer

Without proper documentation, the IRS may assert that the debt is not yet worthless, disallowing the deduction (option A). Additionally, if the debt became worthless in an earlier period, the statute of limitations may prevent the taxpayer from amending that earlier return (option B). Therefore, both options A and B are valid risks that the taxpayer faces without proper documentation.

A Taxpayer Wishes to Take a Deduction for a Worthless