Leslie is a self-employed attorney who uses the cash method of accounting. In Year 1, he handled a case for James (a client) for an agreed fee of $2,000. James did not have the money to pay Leslie in Year 1, so Leslie agreed to defer collection until Year 2. In October Year 2, Leslie learned that he would not collect any of the fee, because James had died penniless.

What are the amount and timing of Leslies bad debt deduction?

Group of answer choices

Leslie claims a $2,000 deduction in Year 2.

Leslie claims a $2,000 deduction in Year 1.

Leslie will claim the $2,000 deduction when he obtains proof that James had no assets.

Leslie cannot claim a bad debt deduction.