Someone also said that invoices not paid can be claimed as a loss on your tax return????? any thoughts on that?

Probably not.  You have already taken the cost of the search (your actual expenses) as deductions. If you were able to deduct the amount of the unpaid invoice, that would be a double deduction and impermissible. 

However, if you do your accounting on the accrual method (i.e., you count the income when you prepare the invoice and you count expenses when you receive your bills), then you could deduct the unpaid invoice.  That makes sense because you would have already counted the income, but not actually received it.  Basically, you are backing out the uncollectable invoices before you do your taxes.

Most small businesses, however, use the cash method of accounting (i.e., you count the income when you actually receive payment and you count the expenses when you actually pay your bills).  It's much more simple.  On the cash method, you cannot deduct unpaid invoices.

Might want to talk to your accountant to see which method applies to you. 

Best,
Robert A. Franco
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