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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: GraceZ who wrote (6476)8/1/2001 11:31:55 AM
From: Ilaine  Read Replies (1) of 74559
 
Corporations write off bad debt because they are on the accrual method, and who wants to pay tax on non-existing income?

For non-US readers, in the US you can either pay income tax on income when you accrue it, that is, when there is a promise to pay, or you can pay it when you actually receive it. Corporations usually are on the accrual method, so they pay income tax on money that they may never get. They can deduct it and get a tax credit if they write down the debt.
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