For U.S.companies, how do U.S.GAAP and income tax reporting compare in their treatment of uncollectible accounts?

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U.S.GAAP and income tax reporting require different treatments of uncollectible accounts. Under U.S.GAAP, companies can choose between the direct write-off method and the allowance method. The direct write-off method only recognizes bad debts when they are actually written off, while the allowance method requires companies to estimate and record an allowance for doubtful accounts based on expected losses. In income tax reporting, however, bad debt deductions are restricted to only those debts that have been included in income. Additionally, the IRS requires companies to use the specific charge-off method or the reserve method for tax purposes.

For USCompanies, How Do U