Tax Question About Chargebacks...

[Lee]

Where and how would you report a chargeback on taxes?

I mean the 'customer' has received the 'product' but has decided to stiff us over, im guessing it gets written off as a loss but im not 100% on this.

Regards,

Lee

[ratakorn]

Lee:

In the US I would write it off as bad debt. You sold a service so it is posted as sales revenue. When you receive the charge back(usually during a later accounting period) i would write it off as an adminstrative expense - bad debt for the amount equal to the sale and the balance would go against bank charges or processing fees.

The net result you don't distort your current months revenues.

R

[TropixxxStudios]

Agreed. Last year I was told to put it under bad debt as well.

[IdolKnights]

add another for bad dept.

This is what our accountant does for us though.

[PornTeam]

We do them as bad dept as well as write off the products/dvds that were sold and the shipping costs of those products.