Go back

Can a cash basis business deduct bad debt?

Bookkeeping & accounting basics

No. On cash basis the income was never recognised, so there is nothing to write off. You simply never recorded the revenue.

Accrual businesses can, because they already took the income into account. The deduction reverses what was previously recognised.

We handle this for founders running US companies.

Ready to take the next step? We would love to help you

This is some text inside of a div block.

Heading

Check your EIN confirmation letter (CP 575) first. If that is gone, look at a previously filed tax return, a business bank account application, or any 1099 you have issued. Your bank or your payroll provider will also have it on file.

previous version