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How does the tax benefit rule apply in the following cases? a. In 2017, the Orange...

How does the tax benefit rule apply in the following cases? a. In 2017, the Orange Furniture Store, an accrual method sole proprietorship, sold furniture on credit for $1,000 to Sammy. The cost of the furniture was $600. In 2018, Orange took a bad debt deduction for the $1,000. In 2019, Sammy inherited some money and paid Orange the $1,000 he owed. Orange's owner was in the 35% marginal tax bracket in 2017, the 12% marginal tax bracket in 2018, and the 35% marginal tax bracket in 2019.

Orange Furniture must include $ 1,000 in gross income as the recovery of a prior deduction. The timing of the income and deductions cost Orange $ .

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ekkarill92 answered 1 year ago
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