4.

Manny Diaz, who is a CPA who uses the cash basis of accounting. In July 2019, Manny billed a client $5,000 for a tax planning project. The client never paid and in fact went bankrupt in 2020 and the $5,000 became worthless.

What loss can Diaz collect on his 2020 tax return?

$3,000 short term capital loss $3,000 nonbusiness bad debt $0 $3,000 business bad debt

5.

Art is a self-employed installer of home entertainment systems, and he drives his car frequently to installation locations. Art drove his car 12,400 miles for business purposes and 27,000 miles in total. His actual expenses, including depreciation, for operating the auto are $10,550 since he had to have the car repaired several times. Art has always used the actual cost method in the past.

How much is Art's deductible auto expense for the year?