Blue Corporation (a seller of goods to Cedar Corporation) has made loans to Cedar Corporation, which become worthless in the current year.

Question

Quizplus · Accepted Answer

The loans made by Blue Corporation to Cedar Corporation, if related to Blue Corporation's trade or business activities (such as selling goods), and become worthless, qualify for a business bad debt deduction. This is because the loans are directly connected to the business's revenue-generating activities, thus allowing Blue Corporation to claim a deduction for the loss.

Blue Corporation (A Seller of Goods to Cedar Corporation) Has