Martha, an accrual-method taxpayer, has an accounting practice. In 2017, she performs tax analyses for Arnold and sends him an invoice for $10,000. In 2018, Martha sells her practice and all accounts to David. Arnold's debt becomes worthless that year after David has purchased the practice. The result is
A) Martha deducts a nonbusiness bad debt in 2018.
B) Martha deducts a business bad debt in 2018.
C) David deducts a business bad debt in 2018.
D) David deducts a nonbusiness bad debt in 2018.
C) David deducts a business bad debt in 2018.
Since David acquired the account upon acquiring the business, he is entitled to a business bad debt deduction because the debt was incurred in the trade or business in which David is currently engaged.
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