Bad debt deduction

To qualified for tax deduction one has to do the following at the minimum:

1. The debt is a trade debt

2. Action has been taken to recover the debts, at the minimum send legal letter

3. Appoint a person to evaluate the case, document the date, name and the information used in arriving at the decision

4. When claiming bed debts make sure the Company has stop business dealing with the customer for the simple reason:-

A debt considered as bad upon customer died, bankrupt, missing or no cost effective way to recover.

Hence there will be no valid business or commercial reason for a company to do business with the bad customer.