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BTLG Table of Contents > Sales and Use Tax Annotations > B > 130.0000 Bad Debts > Annotation 130.0050

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B

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130.0000 Bad Debts—Regulation 1642

Annotation 130.0050

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130.0050 Assignment of Accounts Receivable. A taxpayer assigns its accounts receivable to a related corporation at a 3 percent discount. There is no recourse against the taxpayer by the related corporation for uncollectibles beyond the 3 percent discount. The taxpayer cannot deduct the 3 percent as a bad debt. The selling of the accounts receivable is equivalent to a financing operation secured by the receivable. The discount is the equivalent of interest paid on a loan. 2/3/94.