Reserve Method

About Reserve Method:

Reserve Method (bad Debts) is the accrual of bad-debt expense based on the projected worthlessness of accounts receivable or prior experience with uncollectible receivables. The use of the reserve method by accrual basis taxpayers is permitted only for some small banks and thrift institutions with assets of $500 million or less. Other accrual taxpayers must use the specific charge-off method. Former IRC (check if this IRC provision is current here) §166.