Writeoff of A/R with Early Lease Termination

Client A leases from Company B an event space. Client A then rents out the lease space to the general public for weddings, events, and whatnot. Client A takes reservations, and deposits from the general public up to two years in advance for the event space rentals.

When Client A books an event, they take a deposit, and book the event in their accounts receivable. They are on accrual basis.

This arrangement is all well and good, until Company B sells the event space to Company C (closing date January 2020), who will be renting out the event space on it's own accord, taking over the events that already have been booked.

As part of this buyout, Company B is paying to Client A a 100k buyout payment in 2020.

My question is what do we do with the Accounts Receivable for 2019's tax return. We will not be collecting the revenue from those events, as they will be transferred to Company C with the deed to the event space.

I think I should leave the A/R on the books for 2019, since they will be receiving the lease buyout payment in 2020, which will effectively offset the A/R in it's entirety, plus some. Then we can write off the A/R at the same time that we recognize the lease buyout payment received in 2020. This would match the A/R writeoff with the event that causes it, the buyout.

What is A's accounting method, and has A been reporting the deposits as deposits (deferred income) or sales?

Says above they are on Accrual basis (Paragraph 2), and deposits have been reported as deferred income.

Thank you for your help, Nilo.

bump

I know these are my made up assumptions, but it's easier to answer that way. (And I'm disregarding the separate question of whether the deposits are properly deferred.)

Receivables. 80k
Deposits. 80k
Sale contract signed in Dec, 2019, firm figures, no contingencies.
Contract provides that B pays A 100k for:
Contracts with customers?
Favorable lease terms to be transferred to B?
Or just unspecified? Goodwill or other intangibles?

I think the firm contract signed in 2019 establishes the event needed to make the receivables worthless.
I also think the deposits must be taken into income whenever the receivables are written off, because the contract with B also requires B to honor those deposits.
So it appears not to matter which year because they offset each other.
Speaking of which, they can just be written off against each other, the contra to how they were set up.
You didn't ask about the manner and time of taxing the $100k to be received in 2020.
I hope you plan to call it capital gain.
I think it''s timing is 2020, either because the contract is executory, or because, if it's accruable in 2019, it's an installment sale.

Thank you Nilo.