Deduction for bad debt expense

Reference no: EM13146795

Swan, Inc. is an accrual basis taxpayer. Swan uses the aging approach to calculate the reserve for bad debts. During 2010, the following occur associated with bad debts.

Credit sales $300,000
Collections on credit sales 280,000
Amount added to the reserve 12,000
Beginning balance in the reserve -0-
Identifiable bad debts during 2010 10,000

The amount of the deduction for bad debt expense for Swan for 2010 is:

a. $10,000.
b. $12,000.
c. $20,000.
d. $22,000.
e. None of the above.

Reference no: EM13146795

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