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Charge-Off

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Charge-Off

Eliminate or write off.

The term charge-off is used to describe the process of removing from the records of a company something that was once regarded as an asset but has subsequently become worthless.

A classic case is the bad debt, which is an uncollectible debt. A bad debt is a permissible business tax deduction, and a non-business bad debt may also be claimed as a charge-off in the year the debt becomes entirely worthless. Charge-off is generally used in reference to a charge or debt that is not paid when due.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.
References in periodicals archive
s "It shows that more must be done to educate buyers about write-offs, so they can either decide they want nothing to do with them, or they go into it with their eyes open, fully aware of the risks.
The court accurately reasoned that the taxpayers were the true beneficiaries of the write-off, thus bolstering sound fiscal public policy.
It is very possible that the facts and circumstances upon the write-off differ considerably from those in existence when the initial recording was made.
* Comparing the beginning allowance for doubtful accounts to subsequent write-offs determines the adequacy of the existing allowance.
With the cost of even minimal bodywork damage on the rise, that's understandable, and these days nearly one-quarter of all car accident claims end up as write-offs..
HPI director Daniel Burgess, says: "Unscrupulous private sellers will sell a write-off to make a quick profit.
The number of total losses declared by insurance companies has risen by 86% a year since 1998, meaning write-offs now amount to almost a quarter of all insurance claims.
These write-offs relate to the wet wipes and nonwovens business operations and have no effect on cash flow.
Keeping close track of unpaid balances, write-offs, and refunds is important, and making sure that the latter two are legitimate is critical to survival.
In contrast, by mechanically adjusting book income for the $2 million increase in the allowance for bad debts account, ABC could not claim any portion of the $800,000 deduction until a write-off entry is recorded for financial accounting purposes.
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