Asked by Tally Egbert on Jun 03, 2024
Verified
A business bad debt is treated as a short-term capital loss and can be deducted only when it becomes completely worthless.
Business Bad Debt
Debt associated with the conduct of a trade or business that becomes worthless or uncollectible during the tax year.
Short-Term Capital Loss
A loss realized on the sale or exchange of a capital asset held for one year or less.
Completely Worthless
A term generally used to describe an asset that has lost all of its market value or has no foreseeable use or value.
- Analyze the treatments of bad debts in a business context.
Verified Answer
SG
SYDNEY GARDNERJun 06, 2024
Final Answer :
False
Explanation :
A business bad debt is treated as an ordinary loss, not a capital loss, and can be deducted in the year it becomes either partially or completely worthless.
Learning Objectives
- Analyze the treatments of bad debts in a business context.
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