Nonaccrual Experience Method (NAE)

Categories: Accounting,

A method of accounting that allows companies or service providers to deduct income that could not be collected in the case of bad debt, from their business gross income for the purpose of tax return. NAE is permitted by the internal revenue code only allowed if the company is able to demonstrate that debt (bad debt) cannot be collected and the company earned less than 5 million in at least three previous tax years.