Martha,an accrual-method taxpayer,has an accounting practice.In 2012,she performs tax analyses for Arnold and sends him an invoice for $10,000.In 2013,Martha sells her practice and all accounts to David.Arnold's debt becomes worthless that year.The result is

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David, who purchased the practice and accounts, can deduct the bad debt as a business bad debt in 2013 when Arnold's debt becomes worthless.

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