Question: 2 . How does the tax benefit rule apply in the following scenarios? a . In a prior year, an accrual method taxpayer, sold inventory

2.
How does the tax benefit rule apply in the following scenarios?
a. In a prior year, an accrual method taxpayer, sold inventory on credit for $100,000 to a customer. The cost of the inventory to the seller was $60,000. Last year, the seller took a bad debt deduction for the entire amount owed of $100,000 because the customer would not pay his bill. In 2024, the customer paid the seller the $100,000 owed. The seller was in the 32% marginal tax bracket in the year of sale, the 12% marginal tax bracket in the year the debt was deemed uncollectible, and the 35% marginal tax bracket in the current year.
The seller must include $__________
in the current years gross income as the recovery of a prior deduction.
As a result of the changes in the marginal tax rates that the seller experiences over the 3 years, what is the net additional tax the seller has to pay as a result of the timing of the bad debt deduction and its subsequent recovery?

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