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To The Rescue

The IRS can turn your uncollectable business debts into tax deductions.

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This story appears in the August 1998 issue of Entrepreneur. Subscribe »

If you're like most small-business owners, you probably have some outstanding debts on your books that you just can't seem to collect. While they're a drag on your business, the IRS may let you claim them as a tax deduction.

To determine if you have eligible debts, first carefully examine your company's records. Customers who buy from you on credit are probably the most common source of bad debts, but there are other situations that produce bad debts, such as loans to suppliers, clients, employees or distributors.

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