"Man with a camera" <raytzz[at]verizon.net> wrote:

- quote -

You probably only show income as you collect money from your
customers, right? In that case, if a customer refuses to
pay you, you have no deduction to take. If, on the other
hand, you report income when you bill a customer, you can
right that customer's balance off as a bad debt.

Wayne Brasch, CPA, M. S. Taxation

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Man with a camera wrote:

- quote -

Cash basis taxpayer: There is no deduction. He hasn't
included the income. To deduct the item is to get a
reduction of the non-reported income twice.

Accrual basis taxpayer: As a bad debt.

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Had a client once who was a small contractor. He had some
lumber stolen from a site.

Original cost reflected in supplies and materials; cost of
replacement reflected in supplies and materials.

But his wife accused me of "forgetting" to claim the theft
loss....... Would have been a triple dip, but I never could
convince her.

Nan, EA in LA

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"Man with a camera" <raytzz[at]verizon.net> wrote:

- quote -

If you're a cash basis taxpayer, you don't.

--
D.F. Manno
dommanno[at]netscape.net
"They that can give up essential liberty to obtain a little
temporary safety deserve neither liberty nor safety."
(Benjamin Franklin)

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"Man with a camera" <raytzz[at]verizon.net> writes:

- quote -

If you're not an accrual taxpayer, there's no deduction.

Phil Marti
Topeka, KS

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"Man with a camera" <raytzz[at]verizon.net> wrote:

- quote -

If you're cash basis, there's no deduction. You get the
benefit of not paying taxes on income you didn't receive.

If you're accrual basis, and you've already booked the
income, you have a bad debt -- if you have good evidence
that you tried diligently to collect but it's uncollectable.

There's an explanation at
http://www.toolkit.cch.com/text/P06_2900.asp

--
Chris Green

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"Man with a camera" <raytzz[at]verizon.net> wrote:

- quote -

If you are a "cash basis" business, you don't deduct it
anywhere. There are no deductions for income not received.

If you are an "accrual basis" business, the unpaid invoice
is an adjust to income.

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- quote -

Was this already reported as income, perhaps in a prior year?

Carol
What can one expect of a day that begins with getting out of bed.

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Man with a camera wrote:

- quote -

IF you are on what we call the accrual method of accounting,
and have in fact already included the revenue in income, you
take the deduction as a bad debt on the appropriate line.

However IF you are on the cash method of accounting, and
something tells me you are, you have no income to report
and least of all any deduction. It's a wash so to speak.

Cheer$,
Harlan Lunsford, EA n LA

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- quote -

If you are a cash basis taxpayer, there is nothing to
deduct. You did not receive the money, you did not pay tax
on it, therefore no deduction.

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"Man with a camera" <raytzz[at]verizon.net> writes:

- quote -

If you're a cash-basis taxpayer, you don't deduct it, since
you never had the income (and thus were never taxed on it)
in the first place.

You don't get to double-dip.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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Can anyone tell me how to deduct the fee (invoice for
services rendered)? It is lost revenue due to a customer's
refusal to pay. I have evidence to support the transaction
as wel as copys of the invoice.

Thanks
Ray

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