Final answer:
The correct answer is A) no book-tax difference.
Step-by-step explanation:
The correct answer is A) no book-tax difference.
A book-tax difference occurs when there is a discrepancy between the accounting treatment of an item and its tax treatment. In this case, by recording an allowance for doubtful accounts, Hudson is following generally accepted accounting principles (GAAP) to account for potential bad debt losses. However, for tax purposes, this allowance may not be deductible until the specific accounts are deemed uncollectible. Therefore, there is no difference between the book and tax treatment, and no book-tax difference is created.