Re: Thieving Jerk ?
Greg Sloop, Portland Oregon
>...at least he could write it off as bad debt on taxes.
Just a clairification - I see this type of comment quite regularly...
The provision for bad debt allowance as a write off is just to offset income already declared in the tax filing. (I believe this really only applies when you use an accrual method of accounting. Cash basis accounting should account for the "loss" by a net gain of total revenue minus unpaid debts, bad or not. In short, you never get the cash, thus you never book revenue you have not gotten.)
(If you loaned a vendor some cash or actual product in return for a promise to pay, and didn't get paid back, you can deduct that cash out (lost revenue) from cash in (realized revenue) so you are not paying tax on revenue/cash you never actually got/realized.)
Thus, you shouldn't have to pay tax on money you never got - earnings or income never paid for. Thus you can write off a bad "debt" against income.
You can't write off things without a real paid-for value. You can't "write-off" charitable donations of time. I don't believe you can write off as bad debt someones use of your material (ala B&G) - as you can't define what revenue you'd be taxed twice on...
Disclaimer: Not an accountant, but somewhat familliar with tax code.
Cheers,
Greg
I'm sure some accountant will step up to bork me and my explaination too... :)