The reason is that you can't take a deduction unless you have a true outlay of cash or you actually recognized income (and paid tax on it) that was never collected.
In your case, you never recognized anything other than the $600. You never paid tax on that other $600 since you are most likely on the cash method of accounting.
Has nothing to do with the value "lost".
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
