To deduct bad debt expense for tax purposes,the taxpayer must use:

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The specific charge-off method is required by the IRS for tax purposes when deducting bad debt expense. This method involves identifying specific receivables that are determined to be uncollectible and writing them off as a bad debt expense. The aging of receivables and reserve methods are permitted for financial accounting, but are not necessarily accepted by the IRS for tax purposes. Any other method permitted for financial accounting may not be accepted by the IRS for tax purposes.

To Deduct Bad Debt Expense for Tax Purposes,the Taxpayer Must