The amounts charged to income for bad debts on accounts receivable will generally be the same for both tax and accounting purposes.

Question

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The amount of bad debts charged to income for tax purposes is generally the same as the amount charged for accounting purposes. This is because the Internal Revenue Service (IRS) allows businesses to deduct bad debts from their taxable income. The amount of the deduction is the same as the amount of the bad debt that is charged to income for accounting purposes.

The Amounts Charged to Income for Bad Debts on Accounts