What amount can sara deduct for bad debt

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Sara's Sports Therapy, an accrual-method taxpayer, provides $30,000 worth of physical therapy services to the Sac Republic Basketball Club on credit in 2019. In 2020, Sac Republic dissolved its business operations before paying Sara's any of the $30,000. After the dissolution (in 2020), Sara's determined that it would not collect on the outstanding account receivable (i.e. all $30,000 of the debt became worthless in 2020).

Problem 1: What amount can Sara's deduct for bad debt in 2020 under the specific charge-off method?

Reference no: EM132911376

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