Re:'It's crazy': Chase forgiving all debt owed by its Canada...
by froindt on Thursday August 08, 2019 @11:26PM
(#20651106)
A personal pet peeve of mine is misunderstandings of how taxes work. I'm not sure if you're misunderstanding, but I do want to clarify.
They can certainly take a deduction for some money they wouldn't be able to collect successfully. But they can deduct the entire balance now, rather than writing off small portions over the next so many years. Of course, they're simply not getting taxed on money they didn't earn (since it's a deduction, not a credit).
The mathematically optimal solution is certainly not to write everything off. They could have sold it to a debt collection company and made a larger profit.
They can certainly take a deduction for some money they wouldn't be able to collect successfully. But they can deduct the entire balance now, rather than writing off small portions over the next so many years. Of course, they're simply not getting taxed on money they didn't earn (since it's a deduction, not a credit).
The mathematically optimal solution is certainly not to write everything off. They could have sold it to a debt collection company and made a larger profit.