Discussion:Write off receivable -- report obligation?

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Discussion Forum Index --> Basic Tax Questions --> Write off receivable -- report obligation?
Discussion Forum Index --> Tax Questions --> Write off receivable -- report obligation?

DLI (talk|edits) said:

5 November 2009

A client has taken bankruptcy and owes our Firm a good deal of accounting fees. I expect we will have to write off our accounts receivable.

Not sure whether we are obligated to send a Form 1099 or some other specific forms for this purpose. I did some research. It seems that we can't report cancellation of the debts on 1099-C since we are not in business of lending money. and we don't report on 1099-M since it's cash basis and the client did not pay us at all in 2009. (or is there a way to report write-off receivable on 1099-M? )

Maybe we just write off the recivable and claim bad debts on tax return and don't need to report to IRS regarding this write-off?

Just want to make sure we have the proper treatment of this issue. any comment would be appreciated.

Bertkdo (talk\|edits) said:	5 November 2009
As a Cash Basis Taxpayer, did you already report income for these fees? If not, how can you take a deduction for bad debts? Unless I'm missing something, you have two options on your tax return, 1)Not report anything or 2) Reporting income and offsetting bad debt deduction. Is there an underlying reason for option 2? Possibly easier to explain if taxpayer was audited?