Uncollectable accounts receivable can be written off by small businesses to decrease business income tax liability.

Question

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If a small business has uncollectable accounts receivable, they can choose to write them off as bad debts. This means that the business can deduct the amount of the bad debts from their business income, resulting in a decreased tax liability. This is a legitimate tax deduction allowed by the IRS.

Uncollectable Accounts Receivable Can Be Written Off by Small Businesses