Starting Your Business/Keeping Tax Records

What are Business Expenses

Business Bad Debts

If someone owes you money you cannot collect, you have a bad debt. You may be able to deduct the uncollectible amount when you figure your tax.

A business bad debt is a loss from the worthlessness of a debt that was either:

1. Created or acquired in your trade or business, or
2. Closely related to your trade or business when it became partly or totally worthless.

How to Treat
Where to Deduct

Important References

Publication 535                                                   Business Expenses
Form 1040 Schedule C line 9                           Profit or Loss From Business
Form 1040 Schedule C-EZ line 2                     Net Profit From Business
Form 1040 Schedule F line 34                         Profit or Loss From Farming
Form 1120 line 15                                              U.S. Corporation Income Tax Return
Form 1065 line 12                                              U.S. Partnership Return of Income