Publication 535 |
2001 Tax Year |
Recovery
If you deduct a bad debt on your tax return and later recover
(collect) all or part of it, you may have to include all or part of
the recovery in gross income. The amount you include is limited to the
amount you actually deducted. However, you can exclude the amount
deducted that did not reduce your tax. Report the recovery as "Other
income" on the appropriate business form or schedule.
See Recoveries in Publication 525
for more information.
Net operating loss (NOL) carryover.
If a bad debt deduction increases an NOL carryover that has not
expired before the beginning of the tax year in which the recovery
takes place, you treat the deduction as having reduced your tax. A bad
debt deduction that contributes to a net operating loss helps lower
taxes in the year to which you carry the net operating loss.
More information.
See Publication 536
for more information about net operating
losses.
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