Is it acceptable to run 10-3 wire to a 110V 20A junction box?

A few people mention that receptacles (and switches) can only 'handle' 14 or 12 gauge wire. But that would only be for bare wire ends (and most likely solid wire). If 10 gauge wire is used, it should be stranded and lugs used for attaching to receptacle screw terminals... Of course, if you're going this luxurious route, you'll probably already be using EMT raceways and THWN/THHN stranded wire anyway... Obviously, if using larger conductors, larger (or more) conduits and boxes may be needed as well (btw, always install a larger-sized raceway, if you can fit and/or afford it -- nothing is more frustrating than to need to run another circuit down an existing conduit, only to find that it's already maxed-out at the initial installation).

It is legal, because the 20A breaker will protect that 10-3 wire.

But it is confusing. Someone 10 years from now might think that the circuit is a 30A circuit and replace the receptacle with a 30A receptacle and overload the circuit upstream.

And the extra unused wire is confusing too. And working with 10-3 is much harder than 12-2.

I suggest you go buy a big roll 12-2, you will need it in the future.

Legally, ethically, and according to electrical code, #10 wire is more than adequate for a 20 amp circuit.

However, it will be substantially harder to work 10/3 into place and secure. Even a single #10 wire is at least 50% stiffer and harder to bend than a #12. A bundle of 4 of them will be a major pain-in-the-you-know-what.

Also, it is possible that a run-of-the-mill outlet will not accommodate #10 wires. If you have to pigtail #12 to the #10, you could well run out of space inside the outlet box. And probably patience to make it work.

It might be faster to run to the store and get a suitable length of 12/2.

Totally legit. You are allowed to oversize wire anytime you want.

Breaker amperage is determined by the smallest wire in your circuit. So if all the other wire is 12 gauge, you may breaker for 20A. If any of it is 14ga, you must breaker for 15A.

You are also limited by devices, but common "15A" outlets are allowed in 20A circuits.

You may get into physical fit issues trying to get 10 gauge wire onto terminals meant for 12 gauge. At worst you can pigtail a few inches of smaller gauge wire onto the outlet, but the "smallest wire" rule applies here. That should fit fine in a common 2-1/8 x 4" box if there isn't anything else in there. But I recommend going for the deepest box you got, because those 10ga wires will be stiff and hard to stuff in the box.

Cap off the extra wire with a wire-nut, tape or both; no need to strip it but its copper core can't be permitted to hit anything metal. You might also wrap the outlet along the edge with tape a few times, covering the exposed side terminals.

If the device is not suitable (listed) for #10 wire, you will need to attach #12 pigtails. The larger wire, extra conductor and possible pigtails may make the box rather crowded. Even if you think you can get everything into the box, you should review the box fill requirements in the electrical code.

Since you say you'd prefer 12/2, I'd guess you are looking to install a 15 amp outlet from an existing junction box running a 15A circuit. If this is the case, 10/3 should be fine provided the circuit will not be overloaded and everything else is done mindfully and to code. In fact it's overkill because you have an extra conductor (3 plus ground instead of 2 plus ground) and the wire is larger gauge than you need (10 AWG instead of 12 AWG). Put a wire nut securely on the extra wire (RED I assume) at each junction or back box so it doesn't touch something and become energized. Then, hook up ground, hot, and neutral as normal.