Write-Off

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DEFINITION of 'Write-Off'

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.

BREAKING DOWN 'Write-Off'

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.

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RELATED FAQS
  1. What is a negative write-off?

    A negative write-off is a write-off conducted by a company or accountant after deciding not to pay back an individual or ... Read Full Answer >>
  2. How can I tell which of my business expenses count as write-offs?

    Any basic, reasonably necessary expenses incurred in running a business can be considered possible write-offs. Such expenses ... Read Full Answer >>
  3. What is the difference between a write-off and a deduction?

    There is no difference between a tax write-off and a tax deduction. It's possible that the confusion arises between a tax ... Read Full Answer >>
  4. How does the effective tax rate for an individual differ from that of a corporation?

    There is not much difference between the method of calculating or meaning behind the effective tax rate for individuals on ... Read Full Answer >>
  5. What are some examples of ways businesses can use a deferred tax asset?

    In the United States, allowable claims of deferred tax assets are set forth by the Financial Accounting Standards Board, ... Read Full Answer >>
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    There are some investing costs that can be written off each year, even if you aren't a day trader. The general rule in determining ... Read Full Answer >>
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