Tax treatment of business bad debt

[cjmazur]

If a business buys a judgment in an effort to collect it which is later deemed noncollectable, I understand this is business bad debt.

I am trying to understand the tax treatment of collecting the judgement for the following cases
Buy for <face, collect face
Buy for X, collect <X
Noncollectable.

Perhaps related to this, what is my basis in the above 3 cases as well.

Any nuance as to the structure of the business (LLC, Sole Prop, C-corp, etc.)

Any reference are appreciated as well.