(1) Where a domestic corporation appropriates funds for bad debts to cover bad debts from credit sales accounts, loans, and other claims equivalent thereto as deductible expenses when the settlement of account is fixed for each business year, such bad debts appropriated shall be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year up to the amount calculated, as prescribed by Presidential Decree. <Amended on Dec. 30, 2010; Dec. 24, 2018>
(2) Paragraph (1) shall not apply to a claim referred to in the subparagraphs of Article 19-2 (2). <Amended on Dec. 30, 2010; Dec. 24, 2018>
(3) Where a domestic corporation that has included the appropriation for bad debts in deductible expenses under paragraph (1) has any bad debts incurred, such bad debts shall be first offset by its appropriation for bad debts and the balance of the appropriation for bad debts after offsetting such bad debts shall be subsequently included in gross income when calculating the amount of income for the following business year. <Amended on Dec. 30, 2010; Dec. 24, 2018>
(4) Where a domestic corporation which has included appropriation for bad debts in the deductible expenses under paragraph (1) is merged or divided, the appropriation for bad debts of the corporation as at the registration date of the merger or division which is succeeded to the surviving corporation, etc. (only applicable to where the claims equivalent to the relevant appropriation for bad debts are succeeded together) shall be deemed the appropriation for bad debts held by the surviving corporation, etc. as at the registration date of the merger or division. <Amended on Dec. 30, 2010; Dec. 24, 2018>
(5) A domestic corporation which intends to apply paragraph (1) shall submit a detailed statement on the appropriation for bad debts to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 30, 2010; Dec. 24, 2018>
(6) Matters necessary for the scope of credit accounts, loans, and other claims equivalent thereto and the disposal of appropriation of bad debts under paragraph (1) and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 30, 2010; Dec. 24, 2018>[Title Amended on Dec. 30, 2010]