Final answer:
A bad debt deduction is generally allowed only if the income from the receivable was previously included in income, adhering to the tax principle of matching expenses with the revenues they generate.
Step-by-step explanation:
True, a bad debt deduction is typically permitted for tax purposes only if the income associated with the creation of the account receivable was previously included in income. This principle is based on the tax concept of matching, where expenses are matched to the revenues they helped generate.
There are two methods generally used for accounting for bad debts: the direct write-off method and the allowance method. Under the direct write-off method, businesses record bad debts only when they determine an account is uncollectible. The allowance method, on the other hand, involves estimating uncollectible accounts at the end of each accounting period.