An accrual basis taxpayer accepts a note receivable from a retail customer with a weak credit rating.The taxpayer immediately sells the note to a bank for less than the note's stated value.The taxpayer has a capital loss.

Question

Quizplus · Accepted Answer

The taxpayer has an ordinary loss, not a capital loss, because the note receivable is considered an ordinary business asset, not a capital asset.

An Accrual Basis Taxpayer Accepts a Note Receivable from a Retail