Requirements for Uncollectible Accounts Deduction

13 May




It is common to find in the organizations the item for the estimation of uncollectible accounts, however, do we know how to make it deductible?

In the case of taxpayers wishing to deduct the uncollectible accounts they have in their financial statements, they may make the following deductions: uncollectible loans and losses due to unforeseeable circumstances , force majeure or for disposal of assets other than the cost of the sale.

The authorized deductions must collect, in the case of losses due to uncollectible credits , those considered to be made in the month in which the corresponding limitation period is consummated, or before, if the practical impossibility of collection is known, it is considered that there is a notorious practical impossibility of charging:

a) In the case of loans whose principal maturity on the day of their maturity does not exceed thirty thousand units of investment (UDI) , when within a period of one year from the date of default, collection has not been achieved. In this case, they will be considered uncollectible in the month in which one year of incurring default occurs. When the debtor of the credit in question is a taxpayer carrying out business activities and the creditor reports in writing to the debtor in question that he will make the deduction of the uncollectible loan, in order for the debtor to accumulate the income derived from the debt not covered under the terms of the Income Tax Law (ISR). It should be noted that the taxpayers that apply the aforementioned must inform, no later than February 15 of each year, of the uncollectible credits they deducted in the terms mentioned in this paragraph, in the immediately preceding calendar year.

b) When there are two or more credits with the same natural or legal person indicated in the previous paragraph, all the credits granted must be added to determine if they do not exceed the amount referred to in said paragraph.

c) The provisions of subparagraph a) shall apply in the case of credits contracted with the general public, whose principal fate on the day of maturity is between five thousand pesos and thirty thousand UDI, provided that the taxpayer, in accordance with the rules of a general nature issued by the Tax Administration Service (SAT), report of said credits to the credit information companies that obtain authorization from the Ministry of Finance and Public Credit (SHCP) in accordance with the Law to Regulate the Companies of Credit Information.

d) In the case of loans whose principal fate on the day of maturity is greater than thirty thousand UDI when the creditor has demanded before the judicial authority the payment of the credit or the arbitration procedure has been agreed upon for its collection and also complies with the provisions in clause c).

e) Check that the debtor has been declared in bankruptcy or bankruptcy . In the first case, there must be a judgment declaring the bankruptcy terminated due to a bankruptcy payment or lack of assets.

f) In the case of credit institutions, it is considered that there is a notorious practical impossibility of collection in the credit portfolio when said portfolio is punished in accordance with the provisions established by the National Banking and Securities Commission (CNBV).

g) Taxpayers who deduct credit for uncollectible accounts must consider them canceled in the last month of the first half of the fiscal year in which they are deducted.

h) In the case of accounts receivable that have a mortgage guarantee , only fifty percent of the amount will be deductible . When the debtor makes the payment of the debt or the application of the amount of the auction to cover the debit is made, the deduction of the balance of the account receivable or, where appropriate, the accumulation of the amount recovered will be made.

It is important to mention that credit will be considered the right of a creditor to receive from another debtor an amount in cash , among others: the credit rights acquired by the financial factoring companies, the investments in shares of investment funds in financial instruments. debt and derivative financial operations.

Credits are not considered those that derive from the accumulative income, decreased by the amount of discounts and bonuses on them. They will be considered as credits, from the date on which the corresponding revenues are accumulated and until the date in which they are collected in cash, in goods, in services or until the date of their cancellation for uncollectible. In the case of the cancellation of the operation that gave rise to the credit, the part of the annual adjustment for inflation that corresponds to said credit will be canceled, in the terms established by the Regulation of the Income Tax Law , as long as it is a credit that had been considered for such adjustment. The balances in favor of contributions will only be considered as credits from the day following that in which the corresponding declaration is presented and until the date in which they are compensated, credited or their refund is received, according to the case.


The tax credits that are registered in the special sub-account of uncollectible credits, will be extinguished after five years from the date of registration, when there is practical impossibility of collection.

In the event that the authority is awarded an asset and there were no bidders or no legal positions had been presented, the authority will adjudicate the asset. In this case, the value of the award will be 60% of the appraised value .

The goods that are awarded in favor of the federal treasury may be donated for public works or services, or welfare or charitable institutions authorized to receive deductible donations from the ISR.



The award will be formalized once the executing authority signs the corresponding award act. When the property must be registered in the Public Registry of Property , the award act, duly signed by the executing authority, will have the character of public deed and will be the public document that will be considered as a written testimony for the purposes of registration in said registry.

From the income obtained by auctioning of the diminished goods with the administration and maintenance expenses, 5% will be destined to a fund of administration and maintenance of said goods, which will be constituted in the Treasury of the Federation , in accordance with the rules generalities issued by the Ministry of Finance and Public Credit. Once the assets have been auctioned off, the fiscal authority must reimburse the resources obtained from said fund and, if there is a remainder, 5% of the income obtained will be delivered for capitalization .

The assets awarded by the tax authorities will be considered, for all legal purposes, as goods not subject to the regime of the public domain of the nation , until they are destined or donated for public works or services.

Deductions from persons, entities, trusts, joint ventures, investment funds, as well as any other legal form, whose income is subject to preferential tax regimes, in the case of losses due to uncollectible credits, will be considered made when the term of prescription that corresponds according to the Mexican laws or before if the practical impossibility of collection was notorious.

Now, what we must do is follow these rules, to take advantage of the benefits that according to the law we have. In our financial information, how much does the item of uncollectible accounts represent us in terms of the item of current assets, that is, in terms of liquidity?