:) I am trying to some research to see if I can deduct a business bad debt. In an example from a book, I run into a sentence like this:
Bad debt expense (of the $4000 reserve established, $500 was written off as being currently uncollectible).
Does it mean I can deduct $500 only? Or the other way around, I can deduct $3500? What does "reserve established" mean? Big big big thanks.

Reserve established means the amount reserved for uncollectable accounts. Usually is a percentage on aging accounts receivable. It means out of all these receivable, we estimate such amount will not be collected.

The $500 is realized bad debt. Say, that company that owes us money went out of business and has no asset left, we have no hope of getting the payment, and therefore, what they owe us should be written off.

You may be able to deduct $500 but definitely not $3,500.