Bad Debt for Accrual Based Client

Forum|Forum|5 years ago
March 7, 2021
3 replies
28 views

Hi! You've been so helpful in the past, I have another question. I have an accrual based S corp client who never tracked Accounts Receivable. He now has Bad Debts, and I am trying to figure out a way to use these Bad Debts as an expense. I actually don't think I can as we haven't been tracking Accounts Receivable, but perhaps someone has a suggestion?

Thanks in advance.

ProSeries Professional

This topic has been closed for replies.

Best answer by dascpa

How can you deduct a bad debt expense when you never reported the revenue? Never tracked A/R? Sounds like client has bigger problems to worry about.

dascpaAnswer

Level 11

How can you deduct a bad debt expense when you never reported the revenue? Never tracked A/R? Sounds like client has bigger problems to worry about.

qbteachmt

Level 15

If you always reported the income, then a write off of unpaid sales is lost revenue. You also need to deal with any sales tax issues per your agency requirements.

You should read this, for Credit Sales:

https://www.irs.gov/publications/p535

Don't yell at us; we're volunteers

L

LeetpurpleAuthor

Level 3

Thanks so much for your helpful replies. I usually don't ask a question I don't know the answer to, but I thought maybe your expertise had something I was not aware of.

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