Question

. In October 2013, Jonathon Remodeling Co., an accrual-method taxpayer, remodels and renovates an office building for Dale and bills him $30,000. Dale signs a note for the debt. Dale keeps delaying payment and files bankruptcy in 2014. Creditors are informed that no assets are available for payment. Jonathon Remodeling Co. will report (Points : 3) $0 income in both years $30,000 income in 2013 and a bad debt deduction of $30,000 in 2014 $30,000 income in 2013 and a STCL of $30,000 in 2014 limited to $3,000 after netting $30,000 income in 2013 and then must amend last year's return to show $0 income when advised of the bankruptcy

Answer 1

Jonathon remodelling company will report

$30,000 income in 2013 and a bad debt deduction of $30,000 in 2014