conditionalOne-time items
Non-recurring bad debt write-off
A single large customer write-off that is not part of the normal loss pattern.
Rule
Allowable when the write-off is isolated and the customer concentration is addressed. Recurring bad debt at similar levels is an operating cost.
Evidence lenders expect
- AR aging
- Write-off detail
- Customer bankruptcy notice
Worked example
As reported
Bad debt $71,000
In the memo
Single customer bankruptcy · $71,000 added back
The objection you will hear
Bad debt present in every year.
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