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Mandarinka [93]
2 years ago
7

Monty loaned his friend Ned $24,000 three years ago. Ned signed a note and made payments on the loan. Last year, when the remain

ing balance was $18,000, Ned filed for bankruptcy and notified Monty that he would be unable to pay the balance on the loan. Monty treated the $18,000 as a nonbusiness bad debt. Last year, before considering the tax implications of the nonbusiness bad debt, Monty had capital gains of $7,200 and taxable income of $42,000. During the current year, Ned paid Monty $16,200 in satisfaction of the debt.
Determine Monty's tax treatment for the $16,200 received in the current year.
The nonbusiness bad debt of $18,000 would have been reported as a ________ , and $________ would be included in Monty's gross income.
Business
1 answer:
Airida [17]2 years ago
5 0

Answer:

Short term capital loss and $10,800

Explanation:

Remaining balance - Capital gains

$18,000 - $7,200 = $10,800

Monty can report the bad debt of $18,000 as short term capital loss since it is expense for the business and receivables are not recoverable. This amount can be reported as loss of the business.

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Answer:

$162,500

Explanation:

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Depletion expense = (unit extracted in 2017 / total units that could be extracted) x (Cost- salvage value)

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Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next seven years, because
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The price of the stock today will be $66.19

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