Why is Sally's basis $60,000 when the face value was $80,000?

And why is it a bad debt now?

Problem 7-30 (LO. 1) Sally is in the business of purchasing accounts receivable. Last year Sally purchased an account receivable with a face value of $80,000 for $60,000. During the current year, Sally settled the account, receiving $65,000. Determine the maximum amount of the bad debt deduction for Sally for the current year. If an amount is zero, enter "0" 0 and Sally's basis in the account receivable is $ 60,000 . Therefore, she has a bad debt deduction of$ income of $ 5,000