Tennessee – Bad Debt Deduction Denied

SALT Report 3872 – The Tennessee Supreme Court declined to review an appeals court decision that a taxpayer’s sales tax deductions for bad debts were properly denied. During the audit period the Tennessee legislature revised the bad debt statute and the appeals court determined that the taxpayer was not entitled to the refund under either statute before and after revision. In summary, it was held that the taxpayer and the bank were not acting as a unit but were independent contractors and therefore were not acting as a unit.

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