(1) The amount of irrecoverable claims (hereinafter referred to as "bad debt expenses") due to grounds prescribed by Presidential Decree, such as bankruptcy of the debtor, among the claims held by a domestic corporation, shall be included in deductible expenses for the purpose of calculating the amount of income of the business year prescribed by Presidential Decree. <Amended on Dec. 24, 2018>
(2) Paragraph (1) shall not apply to any of the following claims: <Amended on Dec. 24, 2018; Dec. 22, 2020; Dec. 29, 2020>
1. Claims for indemnity arising from debt guarantees (excluding debt guarantees prescribed by Presidential Decree, such as debt guarantees referred to in any of the subparagraphs of Article 24 of the Monopoly Regulation and Fair Trade Act);
2. Provisional payments, etc. in Article 28 (1) 4 (b). In such cases, determining a specially related person shall be based on the time point of lending.
(3) The amount recovered among bad debt expenses included in deductible expenses under paragraph (1) shall be included in gross income for the purpose of calculating the amount of income for the business year in which the date of recovery falls.
(4) A domestic corporation that intends to apply paragraph (1) shall submit a detailed statement of bad debt expenses to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>
(5) Matters necessary for the scope and disposal of bad debt expenses and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018>[This Article Wholly Amended on Dec. 30, 2010]