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If you are the owner of a daycare center and some families have outstanding upaid bills, are they deductible as a business loss? We've tried calling and collecting the monies owed to us, but, we've been unsuccessful. When is it approriate to write-off the loss?


Expert Mark Anderson's Answer:

If you are a cash basis tax payer, then you cannot write off bad debt.   If you used accrual accounting and it was included in income previously, then you can write it off.  Most small businesses use the cash method of accounting so you probably cannot write it off.  Here is some information from the IRS: http://www.irs.gov/taxtopics/tc453.html

Mark Anderson, JD


21 yrs experience

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