This benefit is significant because other ordinary income such as wages can be offset with these losses. It also will benefit our schools. Accrual basis taxpayers must recognize revenue when earned not received. In other words, an accrual basis taxpayer must recognize income when it sends an invoice to its customers. If the income is later collected, income will be recognized as a bad debt recovery.
Taxes can be an extreme burden for startups.
Don t let the IRS ruin your chances for success. Peter Soh is a CPA with over 8 years of tax and business consulting experience with entrepreneurs and startups. All rights reserved.