Question: 1. Explain why it is difficult for a cash basis taxpayer that sells goods or services to claim a bad debt deduction when an account

1. Explain why it is difficult for a cash basis taxpayer that sells goods or services to claim a bad debt deduction when an account receivable resulting from such sale goes bad?

2. J lends $20,000 to B and it is a business debt. In 2016 B declares bankruptcy and J learns that other creditors in her situation will most likely receive 20 cents on the dollar for the loans outstanding. J doesnt receive any repayment until 2017, when she receives $2,000. How much may J deduct in 2016? 2017? Would the answers change if it was a non-business bad debt?

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