This section contains the nature of the case and procedural background.

Spring (D) sold goods on credit to a customer. D was an accrual method taxpayer. Before the end of the year, the customer went bankrupt, and by the end of the year, it was clear that D would not be paid in full for the goods. D deducted a portion of the sale from gross income as bad debt. This was disallowed. The IRS claimed that since the amount was uncertain and that there were no provisions for partial write-offs, D could not claim the deduction. D then took this lawsuit.

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