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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 ?
Increase charge-off rate by 50% and reduce MPR by 25%: 'A+sf'; 'BBBf'; 'BBsf';
Net Charge-Offs as a Percentage of Total Loans and Leases
* In aggregate dollars, the charge-offs of commercial and multifamily mortgages by banks and thrifts also remained far below those of other loan types during the recession.
166(a)(2) deduction is equal to the company's SSAP 43R credit-related impairment charge-offs for the same items as reported on the company's annual statement.
* Out of a total of 520 North American Industry Classification System industries which had both franchise and non-franchise data, SBA franchise loans had a lower charge-off rate in 376 industries (72 percent), and had a higher charge-off rate in 114 industries (22 percent).
Bob DiGennaro, senior vice president of collections and recovery-Americas at private-label retail credit card provider GE Consumer Finance, said the company saw a dip in total charge-offs and bankruptcy filings in the first quarter, adding that it is too early to disclose specific figures.
Accounting problem: (1) Should the creditor's initial cost basis of a debt security received in the restructuring of a loan be the security's fair value at the restructuring date and should any excess/(deficit) of the security's fair value received over/(under) the loan's net carrying amount be recorded as a recovery of the loan or a charge-off to the allowance for credit losses?
Current ratings for Class A, Class M and Class B (charge-off steady state: 13.00%; MPR steady state: 14.0%): 'AAAsf'; 'AAsf'; 'A+sf'
For the whole industry, charge-off rates peaked in the second quarter of last year to 10.37 per cent of balances.
1.166-1(c)) is recoverable only in part, the IRS may allow the amount that has become worthless as a deduction only to the extent charged off during the tax year (specific charge-off method).
If you decide to pay the debt in full, make sure your credit profile reflects "paid in full." If you settle, the account will most likely be reported as "settled charge-off." Generally, settled amounts must be reported as "other income" when filing taxes.
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