Credit managers don't like to offer them, customers don't like to sign them and many a CFO view them with such skepticism they force the controller to accrue note balances in the reserve for bad debt
. That being said, in these tough times the promissory note can be an excellent instrument for reducing and/or eliminating loss and preserving a good account.
Excluding Stadtlander, which was hit by an increase in the reserve for bad debts
, the group would have posted a 73% jump in sales and a 110% gain in operating profits for the quarter.
These charges include a fee of $31.3 million after taxes for an increase in the reserve for bad debts
in Latin America; a provision for inventory obsolescence in the United States; and unallocated expenses that include the cost of downsizing corporate offices.
585 now applies to eligible thrift institutions that previously kept a reserve for bad debts
[sections] 1.446-1(e)(2)(ii)(b) gives two examples -- an adjustment to a reserve for bad debts
under the section 166 regulations (which is no longer available to most taxpayers), and an adjustment to the useful life of a depreciable asset under the section 167(b) regulations (which is no longer available for most assets, which are depreciated under section 168 or section 197).
SCHUETZE: But we have a ton, a long ton, of anecdotal evidence that the reserve for bad debts
in many financial institutions did not measure up.
1.585-2(a)(2) and gives banks the ammunition to determine a reasonable addition to the reserve for bad debts
Similar rules are provided for a member's deduction for the worthlessness of (and for an addition to a reserve for bad debts
with respect to) an obligation.
(10) prior to 1986, taxpayers were permitted to deduct a reserve for bad debts