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

According to the IRS, a business bad debt is a debt that comes from operating your business. Based on the information given, Blue Corporation made loans to Cedar Corporation, which could be classified as a business debt. If the debt is deemed to be noncollectable, then Blue Corporation can claim a business bad debt deduction on their tax return. In this scenario, the most appropriate deduction for Blue Corporation would be a business bad debt deduction.

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