For example, some state statutes allow companies to exclude transactions to the extent the company maintains a continuing relationship with the specific customer (for account receivable credit balances) or vendor (for outstanding checks).
38676 explains that any difference between the arm's-length charge and the amount actually transferred is to be established as an account receivable from the parent, pursuant to the general principles of Rev.
If a taxpayer sells goods or provides services on credit and the account receivable subsequently becomes worthless, a business bad debt deduction is permitted only if income arising from the creation of the account receivable was previously included in income.
Afterward, they suffered the/RS's constant collection demands while the/RS suffered the cost of carrying the account receivable. Under the new policy, revenue officers are required to advise taxpayers on how to complete OIC forms properly.
For any tax year, the uncollectible amount of a receivable is the amount that bears the same ratio to the account receivable outstanding at the close of the tax year as (1) the total bad debts with respect to accounts receivable sustained during the period consisting of the tax year and the five preceding tax years, adjusted for recoveries of bad debts during such period and (2) the sum of the accounts receivable earned throughout the entire six-year period.