Lenders may no longer take a bad debt deduction or file a refund claim for accounts found worthless on and after January 1, 2025; and
Affiliated entities (as defined under Internal Revenue Code section 1504) of a retailer may no longer take a bad debt deduction or file a refund claim for accounts found worthless on and after January 1, 2025.
The notice clarifies that a retailer that has incurred bad debts generally may continue to take bad debt deductions for California sales or use tax paid that is later found worthless and written off for income tax purposes, because the new law “does not impact a retailer’s ability to take a bad debt deduction on and after January 1, 2025.” Please contact us with any questions.
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