On June 2, 2018, Fred's TV Sales sold Mark a large HD TV on account for $12,000. Fred's TV Sales uses the accrual method. In 2019, when the balance on the account was $8,000, Mark filed for bankruptcy. Fred was notified that he could not expect to receive any of the amount owed to him. In 2020 final settlement was made and Fred received $1,000. How much bad debt loss can Fred deduct in 2020?2019. The loss in 2019 would be $8,000. In 2020, the account has been written down to zero, hence, the collection of $1,000 would produce a $1,000 ($1,000 - $0) gain rather than a loss.

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Fred can deduct the bad debt loss in 2019 when he was notified that he could not expect to receive any of the amount owed, which would be $8,000. In 2020, the $1,000 received is considered a recovery, not a loss.

On June 2, 2018, Fred's TV Sales Sold Mark a Large