How does the tax benefit rule apply in the following cases? 

a. In 2020, 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 2021, Orange took a bad debt deduction for the $1,000. In 2022, Sammy inherited some money and paid Orange the $1,000 he owed. Orange’s owner was in the 35% marginal tax bracket in 2020, the 12% marginal tax bracket in 2021, and the 35% marginal tax bracket in 2022.

b. In 2021, Marvin, a cash basis taxpayer, took a $2,000 itemized deduction for state income taxes paid; the deduction was not limited by the SALT cap. This increased his itemized deductions to a total that was $800 more than the standard deduction. In 2022, Marvin received a $1,500 refund when he filed his 2021 state income tax return. Marvin was in the 12% marginal tax bracket in 2021 but was in the 35% marginal tax bracket in 2022.

c. In 2021, Barb, a cash basis taxpayer, was in an accident and incurred $8,000 in medical expenses, which she claimed as an itemized deduction for medical expenses. Because of the 7.5%-of-AGI reduction, the expense reduced her taxable income by only $3,000. In 2022, Barb successfully sued the person who caused the physical injury and collected $8,000 to reimburse her for the cost of her medical expenses. Barb was in the 22% marginal tax bracket in 2021, 12% in 2022.