[Pugchief]

Originally Posted by Pugchief

That depends on whether you are using cash or accrual accounting. That is correct for cash, but not for accrual.

In a cash system, you never received the income in the first place, so there is nothing to deduct.

Originally Posted by GregR

I am not a CPA, but an important distinction is that if you use accrual accounting, your revenue is booked when it's earned, and you pay income tax on it even though you never got any actual cash from the customer yet. Eventually, if the customer never pays or you accept some lesser amount, that difference can be booked as a bad debt, but the write-off is against taxes you already paid. The long-term net is the same. Either you never pay taxes on revenue you never receive in a cash system, or you can claim a write-off in an accrual system, but only against taxes you had to pay up front.

Correct.

Originally Posted by dewilson58

Wrong.

The doctor is not allowed to book the "Charged" rate.
The doctor books the net agreement charge(s)......medicare &/or private insurance.
The doctor tracks the Charged amount, but it is NOT books under the accrual method.

"Under Generally Accepted Accounting Principles (GAAP)—specifically ASC 606 (Revenue from Contracts with Customers)—a practice can only recognize the allowed rate (the amount it actually expects to collect) as net revenue."

You are also correct, except about GregR being wrong. He never said the part in red. Maybe you inferred it, but it was not stated.

Originally Posted by retiredguy123

I agree, but note that most small to mid-size medical offices use the cash based accounting system, not the accrual system.

And also correct.