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It would depend on what year the loss occurred and whether you took the loss.
While it is a recovery, it's still ~90% loss.
While I am not a CPA, I imagine there is a method to recapture this recovery, if the loss had been taken in previous year(s).
A CPA probably knows of a half dozen ways to account for this.
However, legally, it is not considered "income".
It took place in 2001 and the Business filed bankruptcey. We just received this year about $11,000 of a judgement of $130,000. I believe we only took a loss for the attorney fees only of about $45,000.
The attorney fees would be a business expense, not a loss.
You should have taken a loss on the bad debt.
But, if you didn't you could do so now.
I'll Check with our CPA! Thanks! for the Quick Response!
Either way, the $11k is not income. But, I'm sure there is a generally accepted and well known (by a CPA) method for