35(1) In calculating the profits of a trade, no deduction is allowed for a debt owed to the person carrying on the trade, except so far as–
(a)the debt is bad,
(b)the debt is estimated to be bad, or
(c)the debt is released wholly and exclusively for the purposes of the trade as part of a statutory insolvency arrangement.
35(2) If the debtor is bankrupt or insolvent, the whole of the debt is estimated to be bad for the purposes of subsection (1)(b), except so far as any amount may reasonably be expected to be received on the debt.