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| Bud Ace, a self-employed carpenter, reports his income on the cash basis. During 2012 he completed a job for a customer and sent him a bill for $3,000. The customer was not satisfied with the work and indicated that he would only pay $1,500. Ace agreed to reduce the bill to $2,000 but before payment was made the customer died. Ace could not collect from the customer’s estate and should treat this loss as A. A short-term capital loss of $1,500. B. An ordinary business deduction of $3,000. C. An ordinary business deduction of $2,000. D. A nondeductible loss as no income was reported. |