bad debt


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Related to bad debt: Bad Debt Expense, Bad Debt Recovery

bad debt

n. an uncollectible debt. The problem is to determine when a debt is realistically dead, which means there must be some evidence of uncollectibility or a lengthy passage of time. Discharge in bankruptcy, the running of the statute of limitations to bring a lawsuit, disappearance of the debtor, a pattern of avoiding debts or the destruction of the collateral security can all make a debt "bad." For income tax deduction purposes such a debt in business is deductible against ordinary income (found in Schedule C) and such a personal debt is deductible against short-term capital gains. A debt due for services rendered is not a bad debt for tax purposes, since there is just no income on which to be taxed.

bad debt

noun dishonored bill, inconvertible bill, irreeeemable bill, irretrievable debt, loss, outstanding debt, protested bill, uncollectible debt, write-off
Associated concepts: bad debt loss, bad debt tax deduction
See also: nonpayment
References in periodicals archive ?
A business bad debt often originates as a result of credit sales to customers for goods sold or services provided.
Nghia said, With such measures of the central bank and credit institutions plans to sell bad debt, we believe that VAMC s goal to buy VND70-100 trillion worth of bad debt is obtainable.
In the event of a customer being unable to pay up, the business with bad debt protection still gets paid.
But we use a range of methods to pursue bad debt until it becomes uneconomical or impossible to recover it as when the debtor dies.
The tax tip of the week is to check each bad debt situation and only work for owners who pay promptly.
Nobody knows how big the Japanese banks' bad debt problems really are (including the banks themselves), but one thing is clear: Writing off such "nonperforming" loans will mean closing many businesses and prolonging the recession, thus adding to the mountain of bad debts.
Treasury, the IMF and the Bank for International Settlements, you might conclude that the single most important problem underlying Japan's economic sickness is the bad debt problem of the Japanese banks.
Turkey's three state-owned banks have less bad debt in absolute terms, at around $20 billion.
The group agreed upon a number of criteria for a uniform bad debt statute, including a definition, statute of limitations, tax due on the bad debt, refunds of bad debt credit, and provision of a deduction from gross sales in the period the debt is deducted.
On his personal income tax return, the taxpayer deducted the unpaid loans as a business bad debt.
Unfortunately, removing the principal amount owing from the ledger does not always represent the true cost of the bad debt when one considers the impact on other aspects of the business.