In 2010, Tru Corporation Deducted $5,000 of Bad Debts

question 113

Essay

In 2010, Tru Corporation deducted $5,000 of bad debts. It received no tax benefit from the deduction because it had an NOL in 2010 that it was unable to carry back or forward. In 2011, Tru recovered $4,000 of the amount due.
a)What amount must Tru include in income in 2011?
b)What effect does the $4,000 have on E&P in 2011, if any?

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Definitions:

Young Adulthood

A stage of life following adolescence, typically characterized by the development of personal and economic independence.

College Transition

Refers to the process and period of adjustment that a student undergoes when moving from a high school environment to a college or university setting.

Emerging Adults

Individuals in a developmental phase ranging from late teens to mid-twenties, navigating transitions between adolescence and full adulthood.

Social Integration

The process during which newcomers or minorities are incorporated into the social structure of the host society.