Question: ( CH 9 ) Martha, an accrual method taxpayer, has an accounting practice. She performs tax analyses for Arnold and sends him an invoice for

(

9)

Martha, an accrual method taxpayer, has an accounting practice. She performs tax analyses for Arnold and sends him an invoice for $

10, 000

in the current year. Martha subsequently sells her practice and all accounts to David. Arnold's debt becomes worthless that year after David has purchased the practice. As a result

Martha deducts a nonbusiness bad debt.

Martha deducts a business bad debt.

David deducts a business bad debt.

David deducts a nonbusiness bad debt.

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