Re: Re: Re: Can someone confirm this? Cmon guys quit arguing with me. LOLOL A 1099c has nothing to do with a debtor or his relationship to the OC. It has ONLY to do with tax treatment of income and losses for the business. Business Accounting 101 http://www.toolkit.cch.com/text/P06_2975.asp Bad Debt Recoveries In a few rare cases, you might have a customer pay his debt after you've given up on it and written it off. It happens. If it does, you'll have to make some general journal entries to reflect the payment. Hey, there are worse things that could happen than having to account for the fact that someone unexpectedly gave you money. For example, say that on December 31 you had written off Roderick Spode's $50 account as uncollectable. The company now ledgers a debit on the negative side of the books and takes the tax writeoff. Suppose that good old Roderick comes into some money and decides to pay you off in full on January 20. Now the company must include this as income by ledgering on the CREDIT side of the books and return the tax writeoff they got last year. In this case the debtor owes $50. in one year, but pays it the following year. During the first years taxes the debt is written off as a loss, and in the second year, if the debtor pays, as in this case (or the debt is collected) the business must now REVERSE the deduction they received last year. The debt is not forgiven permanently. It merely relieves the business from having to pay taxes on this money until the year in which the money is actually received. These entries now have the effect of increasing your cash accounts by $50 and decreasing your allowance for doubtful accounts by the same amount. What if the customer were to pay only part of what he owed? What if he paid only $25? If that happens, you have a judgment call to make. If you believe he will pay all of it back, you may want to go ahead and make the accounting entries as if he had paid the amount in full. If you do not believe he will pay it all back, you should make entries to reflect only that he has paid you $25. Resistence is futile. You will be assimilated.
Re: Re: Re: Can someone confirm this? So if you pay the OC the money you supposedly owe them you get the income tax money you paid on the 1099c back too?
Re: Re: Re: Re: Can someone confirm this? Now that could be possible. If the OC kites the bill in order to acheive a higher than appropriate tax deduction. It'd be up to the IRS to investigate tho, and you'd never know what happened.
Re: Re: Re: Re: Can someone confirm this? Absolutely. The point is that the IRS wants their tax money from SOMEONE. While at the same time they do not expect to get it from more than one person. If the OC writes it OFF, YOU must write it ON (lol) and visa versa. That's why you get your own copy of the 1099. You're expected to include that as income and pay the tax. See?
Re: Re: Re: Can someone confirm this? The only direction I'm taking is to seek information about the subject, learn as much as I can. Personally, I had the same idea you do going in to the conversation. I'd rather stay as far away from the IRS as possible. I already know what works far better than any of the other schemes I'm continually hearing about even though it too has some shortcomings. I just want what I do to be as perfect as possible and the only way to get there is to see what the other fellow has to say and investigate it to see if there might be value in it and if so how would one extract the value in it and also do the disadvantages outweigh the advantages. I can't do that if I close my brain and take the stance that I've got the only way and nothing that anybody else has to say counts for a hill of beans. People often accuse me of doing just that but it simply isn't so. I still want to hear some more opinions on this thread.
