pay you later (even worse)

[Robert Scott]

Gerald wrote:

> I you don't collect your fee you can use as a tax
> deduction. All is not lost. It goes in the bad debt
slot.

If you are using the cash method of accounting then
there is nothing to deduct, because the lost income
was never counted in the first place.  In cash
accounting, income is counted as income when it is
received, and expenses are counted as expenses when
they are paid.  The bad debt deduction only applies to
the accrual method of accounting, where income and
expenses are counted as soon as they are owed.

Robert Scott
Ypsilanti, Michigan



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