You gave someone money or offered them credit. They never paid you back. Can you deduct the loss on your income taxes?
Offering credit to customers can be a good thing for your business. It increases your accounts receivable. It can lock in a long-term relationship with a customer. It provides extra income in the form of finance charges. And it promotes good will for your company.
But how do you reflect the loss on your business income taxes if this money isn't paid back? If you are structured as any kind of corporation other than an S Corporation, all uncollectible debt is considered business bad debt. [MORE] . . .