need help with this question. It concerns 2015 Federal income Tax. Jason Budd, C

Question

need help with this question. It concerns 2015 Federal income Tax.

Jason Budd, CPA, reports oil the cash basis. In April 2014. Budd billed a client dollar 5,000 for the following professional services: Personal estate planning dollar 3,500 Personal tax return preparation 1,000 Compilation of business financial statements 500 No part of the dollar 5,000 was ever paid In April 2015, the client declared bankruptcy and the dollar 5,000 obligation became totally uncollectible. What loss can Budd deduct on his tax return for this bad debt? dollar 0 dollar 1,000 dollar 1,500 dollar 3,500 dollar 5,000

Explanation / Answer

Answer is 0

Because firm maintains its books of acconts on cash basis. Cash basis means income is recognized only when payment received from client. So there is no question of bad debts.

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