Business, 29.10.2019 00:31 hazle9409

Monty loaned his friend ned $20,000 three years ago. ned signed a note and made payments on the loan. last year, when the remaining balance was $11,000, ned filed for bankruptcy and notified monty that he would be unable to pay the balance on the loan. monty treated the $11,000 as a nonbusiness bad debt. last year, before considering the tax implications of the nonbusiness bad debt, monty had capital gains of $9,000 and taxable income of $45,000. during the current year, ned paid monty $10,000 in satisfaction of the debt. determine monty’s tax treatment for the $10,000 received in the current year.

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Monty loaned his friend ned $20,000 three years ago. ned signed a note and made payments on the loan...