In 2012 the orange furniture store an accrual method

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In 2012, the Orange Furniture Store, an accrual method taxpayer, sold furniture on credit for $1,000 to Sammy. The cost of the furniture was $600. In 2013, Orange took a bad debt deduction for the $1,000. In 2014, Sammy inherited some money and paid Orange the $1,000 he owed. Orange was in the 35% marginal tax bracket in 2012, the 15% marginal tax bracket in 2013, and the 35% marginal tax bracket in 2014.

Orange Furniture must include $ in gross income as the recovery of a prior deduction.

Reference no: EM13588176

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