Please Identify the:

Issue (Describe the tax issue, i.e., the question that you are researching

Conclusion (The answer to the tax question)

Discussion of Reasoning and Authorities

1. Deducting Bad Debt Loss

Last year your client, Barney Bumluck, worked part-time for Timely Tax Return Preparation Service. Barney was promised an hourly wage plus a commission. He worked under this arrangement from early February until April 15. His accrued pay amounted to $900 plus $120 of commissions. When he went to collect his pay, however, he found only a vacant office with a sign on the door reading Nothing is sure but death and taxes.

Can Barney take a bad debt deduction for the wages and commission he was unable to collect?

Research Aids: Reg. Section 1.166-1(e)