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IRS.gov Website
Publication 535
taxmap/pubs/p535-053.htm#en_us_publink1000154215

Recovery of a Bad Debt(p40)

rule
If you claim a deduction for a bad debt on your income tax return and later recover (collect) all or part of it, you may have to include all or part of the recovery in gross income. The amount you include is limited to the amount you actually deducted. However, you can exclude the amount deducted that did not reduce your tax. Report the recovery as "Other income" on the appropriate business form or schedule.
See Recoveries in Publication 525 for more information.
taxmap/pubs/p535-053.htm#en_us_publink1000154216
Net operating loss (NOL) carryover.(p40)
If a bad debt deduction increases an NOL carryover that has not expired before the beginning of the tax year in which the recovery takes place, you treat the deduction as having reduced your tax. A bad debt deduction that contributes to a NOL helps lower taxes in the year to which you carry the NOL. For more information about NOLs, see Publication 536. Also, see the Instructions for Form 1045, and the Instructions for Form 1139.