Final answer:
True. Business bad debts may only be deducted when entirely worthless.
Step-by-step explanation:
The statement 'Business bad debts may only be deducted when entirely worthless' is True.
In business accounting, a bad debt refers to a debt that is deemed uncollectible and is written off as a loss. According to the Internal Revenue Service (IRS) guidelines, a business can only deduct a bad debt when it is entirely worthless. This means that the business has made reasonable efforts to collect the debt but has been unsuccessful.
For example, if a business has extended credit to a customer and the customer fails to make the payment, the business can claim the bad debt deduction only when it is certain that the debt will not be recovered.