[Question] Recording 'Forgiven Debt' in Quickbooks

[litlearth]

Hi,
I have a client that I do some bookkeeping for. I use Quickbooks. He has a debt that has been forgiven. How do I record this in Quickbooks without just deleting the bills? Doesn't this need to show somewhere in the books for taxes or whatever? If I delete them, there will be no record of having the bills. If anyone here can help me with this, I would greatly appreciate it.

Thanks

[Balanced Business Service]

If it is a Long Term Loan then debit the Liability and credit an income account.

If it was an accounts payable, then you can go through Enter Bills and choose the credit bullet and the offsetting account would typically be for what they purchased unless it was a Fixed Asset.

If it's from a previous year it may be considered income so check with your client's tax person to make sure.

I hope this helps.

[litlearth]

Thanks so much! That helps a lot. It's an accounts payable, and it actually dates back to 2005. There are a number of entries of this that equals a bit over $200,000 (printing/reproduction)! So I have A LOT of crediting to do with this one! I wish QB had a quicker way to do this, but it looks like I will have to go one by one to complete this one! OH WAIT! Do you think I can do a whole credit for the vendor for the full amount and it 'cancels' out that way?

Thanks again for the info you provided. That helps a lot!

[Balanced Business Service]

What ever the amount is that was forgiven is the number you use but you need to check with a tax professional first to make sure you post correctly. See if the tax person says it is income before you post.

[litlearth]

Yes. I'm waiting on her answer. She's been so busy with taxes and haven't had a chance to get back with me on it. It is an expense and not income.


Thanks a bunch