Write-Off

A A A

DEFINITION

A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues.

INVESTOPEDIA EXPLAINS

For example, if you spend money on dinner to take out a client, that meal is a possible write-off towards your income because you presumably discussed business opportunities during the dinner.

Suppose, for another example, you made a sale on credit to a customer, but two weeks later the client's business declared bankruptcy and became completely unable to pay off the credit account with you. This uncollectible debt would then be written-off by your company and recorded as an expense by accountants.


RELATED TERMS
  1. Discontinued Operations

    A segment of a company's business that has been sold, disposed of or abandoned. ...
  2. Bad Debt Recovery

    A debt from a loan, credit line or accounts receivable that is recovered either ...
  3. Cash Flow

    1. A revenue or expense stream that changes a cash account over a given period. ...
  4. Write-Down

    Reducing the book value of an asset because it is overvalued compared to the ...
  5. Asset

    1. A resource with economic value that an individual, corporation or country ...
  6. Home Office Expense

    Expenses incurred from the operation of a business or the performance of employment-related ...
  7. Operating Expense

    A category of expenditure that a business incurs as a result of performing its ...
  8. Negative Income Tax - NIT

    A guaranteed minimum income plan advocated by economist Milton Friedman in 1962 ...
  9. Nonperforming Asset

    A debt obligation where the borrower has not paid any previously agreed upon ...
  10. Reimbursable Out-Of-Pocket Costs

    Cash payments that an individual or company incurs on behalf of the company, ...
Related Articles
  1. How To Qualify For The Home-Office Tax ...
    Taxes

    How To Qualify For The Home-Office Tax ...

  2. Can You Handle A Home-Based Business?
    Entrepreneurship

    Can You Handle A Home-Based Business?

  3. Tax Breaks For Canadian Families
    Retirement

    Tax Breaks For Canadian Families

  4. Tax Tips For The Individual Investor
    Retirement

    Tax Tips For The Individual Investor

  5. Promissory Notes: Not Your Average IOU
    Personal Finance

    Promissory Notes: Not Your Average IOU

  6. Employee Stock Options (ESO)
    Options & Futures

    Employee Stock Options (ESO)

  7. Cut Taxes By Reporting Property Damage
    Taxes

    Cut Taxes By Reporting Property Damage

  8. Assessing Bank Assets: Are Your Savings ...
    Savings

    Assessing Bank Assets: Are Your Savings ...

  9. Is Your Bank On Its Way Down?
    Personal Finance

    Is Your Bank On Its Way Down?

  10. If I pay for a course to learn about ...
    Investing

    If I pay for a course to learn about ...

comments powered by Disqus
Hot Definitions
  1. Cash and Carry Transaction

    A type of transaction in the futures market in which the cash or spot price of a commodity is below the futures contract price. Cash and carry transactions are considered arbitrage transactions.
  2. Amplitude

    The difference in price from the midpoint of a trough to the midpoint of a peak of a security. Amplitude is positive when calculating a bullish retracement (when calculating from trough to peak) and negative when calculating a bearish retracement (when calculating from peak to trough).
  3. Ascending Triangle

    A bullish chart pattern used in technical analysis that is easily recognizable by the distinct shape created by two trendlines. In an ascending triangle, one trendline is drawn horizontally at a level that has historically prevented the price from heading higher, while the second trendline connects a series of increasing troughs.
  4. National Best Bid and Offer - NBBO

    A term applying to the SEC requirement that brokers must guarantee customers the best available ask price when they buy securities and the best available bid price when they sell securities.
  5. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and FINRA, after an investor has bought securities on margin, the minimum required level of margin is 25% of the total market value of the securities in the margin account.
  6. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee, then lease a guarantee to that customer for a set amount of money and over a set period of time, typically less than two years.
Trading Center