Business, 04.03.2021 22:40 jrmhlocomotoguy510

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. The nonbusiness bad debt of $11,000 would have been reported as a short-term capital loss , and $fill in the blank 2 53,000 would be included in Monty's gross income this 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...

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