The amount of the addition to the reserve for bad debts for an accrual method taxpayer is allowed as a deduction for tax purposes but is not allowed for a cash method taxpayer.

Question

Quizplus · Accepted Answer

For tax purposes, both accrual method and cash method taxpayers are generally not allowed to deduct additions to a reserve for bad debts. Instead, specific bad debt deductions are typically allowed only when they become partially or wholly worthless.

The Amount of the Addition to the Reserve for Bad