Can you deduct bad business debt? It depends

38250561 - cash money going down sink drain isolated on white background.Have bad business debt?

Maybe you accepted a check for goods or services and the check bounced. Your phone calls to the client went unanswered. Maybe you loaned money to a business associate, but the loan is overdue and the associate is gone.

Such debts may seem like money down the drain, but all may not be not lost.

You may be able to deduct bad business debt, in full or in part, depending on the circumstances. You’ll need to document the debt, of course — that’s the paperwork showing you are legitimately owed money, and records showing your attempts to collect.

While deducting some bad business debts can be simple and straightforward, in other cases there are complicating factors. For instance, what if two or more people owe you money together, but only one doesn’t pay? What if you received property in partial settlement of the debt, then sold the property for more than its original worth?

Tax-related issues can be tricky — and tax laws are always changing. That’s why we’re here! At Barlin Business Solutions, we offer a full range of tax and accounting services. As a business owner or busy professional, you have a lot to worry about. Your books shouldn’t be one of them.


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