Oregon Construction Contractors (CCB) Practice Test

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Is it possible for a business to claim deductions for bad debts in any situation?

Yes, if they are written off appropriately
No, it is generally disallowed
Yes, but only if they are business debts
No, not for any debts

The correct answer is: No, it is generally disallowed

A business can indeed claim deductions for bad debts in certain situations, particularly when those debts have been determined to be uncollectible and have been formally written off. To be able to claim these deductions, the business must maintain accurate records showing the attempt to collect the debt and the measures taken to resolve the situation. It's also important to note that bad debt deductions pertain specifically to business debts rather than personal debts. A business can only deduct business-related bad debts, so in a general sense, while businesses have the ability to claim these deductions, the statement provided does not accurately reflect the conditions under which they can do so. Therefore, it is crucial to understand the requirements and contexts that allow for these deductions, indicating that the possibility of claiming them is indeed present and applicable under the right circumstances.