Question

Last year, lucy purchased a $100,000 account receivable for $90,000. during the current year, lucy collected $97,000 on the account. what are the tax consequences to lucy associated with the collection of the account receivable? no subsequent collections are expected

Answer 1

None of the above.
RATIONALE: The amount collected is $7,000 ($97,000 - $90,000) more than Lucy's basis in the
receivable.