How does the tax benefit rule apply in the following cases? Question Content Area a. In 2021, 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 2022, Orange took a bad debt deduction for the $1,000. In 2023, Sammy inherited some money and paid Orange the $1,000 he owed. Orange's owner was in the 35% marginal tax bracket in 2021, the 12% marginal tax bracket in 2022, and the 35% marginal tax bracket in 2023. Orange Furniture must include $fill in the blank 6af05cfde02efa1_1 in gross income as the recovery of a prior deduction. The timing of the income and deductions cost Orange $fill in the blank 6af05cfde02efa1_2. Question Content Area b. In 2022, 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 2023, Marvin received a $1,500 refund when he filed his 2022 state income tax return. Marvin was in the 12% marginal tax bracket in 2022 but was in the 35% marginal tax bracket in 2023. How much must Marvin include in his gross income for 2023?$fill in the blank fe7a27f5a008fc6_1 Question Content Area c. In 2022, 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 2023, Barb successfully sued the person who caused the physical injury and collected $8,000 to reimburse her for the cost of her medical expenses. Barb was in the 22% marginal tax bracket in 2022, 12% in 2023. What amount, if any, will Barb include in her 2023 gross income?$fill in the blank 7b5df5061042ffd_1
How does the tax benefit rule apply in the following cases?
Question Content Area
a. In 2021, 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 2022, Orange took a
Orange Furniture must include $fill in the blank 6af05cfde02efa1_1 in gross income as the recovery of a prior deduction. The timing of the income and deductions cost Orange $fill in the blank 6af05cfde02efa1_2.
Question Content Area
b. In 2022, 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 2023, Marvin received a $1,500 refund when he filed his 2022 state income tax return. Marvin was in the 12% marginal tax bracket in 2022 but was in the 35% marginal tax bracket in 2023. How much must Marvin include in his gross income for 2023?
$fill in the blank fe7a27f5a008fc6_1
Question Content Area
c. In 2022, 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 2023, 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 2022, 12% in 2023. What amount, if any, will Barb include in her 2023 gross income?
$fill in the blank 7b5df5061042ffd_1
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