H.R.25
Fair Tax Act of 2005 (Introduced in House)
http://thomas.loc.gov/cgi-bin/query/z?c109:H.R.25:
`SEC. 205. BAD DEBT CREDIT.
`(a) Financial Intermediation Services- Any person who has experienced a bad debt (other than unpaid invoices within the meaning of subsection (b)) shall be entitled to a credit equal to the product of--
`(1) the rate imposed by section 101, and `(2) the quotient that is--
`(A) the amount of the bad debt (as defined in section 802), divided by `(B) the quantity that is 1 minus the rate imposed by section 101.
`SEC. 802. BAD DEBTS.
`(a) In General- For purposes of section 205(a), a bad debt shall be a business debt that becomes wholly or partially worthless to the payee. `(b) Business Loan- For purposes of subsection (a), a business loan or debt is a bona fide loan or debt made for a business purpose that both parties intended be repaid. `(c) Determination of Worthlessness-
- `(1) IN GENERAL- No loan or debt shall be considered wholly or partially worthless unless it has been in arrears for 180 days or more, except that if a debt is discharged wholly or partially in bankruptcy before 180 days has elapsed, then it shall be deemed wholly or partially worthless on the date of discharge.
- `(2) DETERMINATION BY HOLDER- A loan or debt that has been in arrears for 180 days or more may be deemed wholly or partially worthless by the holder unless a payment schedule has been entered into between the debtor and the lender.
`(d) Cross Reference- See section 205(c) for tax on subsequent payments.
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