Quote:
Originally Posted by It's Hot There
GR is wrong.
GR stated, "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."
This is what the tread is about.
So GR did state the red wording.
You can pretend he's talking about something else, but it's very clear he is talking about the OP post.
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Sigh.
Do you understand the difference between Cash and Accrual accounting? I think not.
Smaller businesses generally use the Cash system.
Income is only recorded as it is received. So you can't write off "bad debt" in a Cash system because the funds were never received in the first place.
Larger businesses use the Accrual system.
Income is booked as it is charged out. If there is bad debt, you can deduct/write this off because it was originally booked as income
unlike in a Cash system.
Go back and read what Greg R wrote, and if anything he said is in opposition to what I just explained, please quote that specific part.