Martha, an accrual- method taxpayer, has an accounting practice. In 2017, she performs tax analyses for Arnold and sends him an invoice for $10,000. In 2018, Martha sells her practice and all accounts to David. Arnold's debt becomes worthless that year after David has purchased the practice. The result is

Question

Quizplus · Accepted Answer

David, who purchased the practice and the accounts, can deduct the bad debt as a business bad debt in 2018 since the debt became worthless after he acquired it.

Martha, an Accrual- Method Taxpayer, Has an Accounting Practice