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Re: collection losses

Unfortunately, as a "cash basis" taxpayer, you can not claim an expense for money that you never collect. That's because you are only taxed on money you receive.

Most larger companies can write-off uncollectible accounts since they are on the "accrual basis" of accounting. What that means is that they report income when they make the sale. So if a customer never pays them, the only way to get that uncollectible debt off the books is by writing it off.

I hope this helps clarify this for you.

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