Problem 6-12 (Algorithmic) (LO. 1)
Monty loaned his friend Ned $23,000 three years ago. Ned signed a note and made payments on the loan. Last year, when the remaining balance was $17,250, Ned filed for bankruptcy and notified Monty that he would be unable to pay the balance on the loan. Monty treated the $17,250 as a nonbusiness bad debt. Last year before considering the tax implications of the nonbusiness bad debt, Monty had capital gains of $6,900 and taxable income of $38,500. During the current year, Ned paid Monty $15,525 in satisfaction of the debt.
Determine Monty's tax treatment for the $15,525 received in the current year.
The nonbusiness bad debt of $17,250 would have been reported as a short-term capital loss , and $ would be included in Monty's gross income.
As per Question , it is clearly mentioned that $ 17250 would be reported as short term capital Loss as Non Business bad debt .
But How much amount would be included in Monty's gross income , as explained below :
Monty recently received $ 15525 in the current year but he can not consider full amount as income . He has to calculate Capital Gain before that .
Monty's capital gain - ( tax benefit Prior Year ( important line to remember ) - $ 6900
Add - Annual Allowance limit - $ 3000
Total amount to include Monty's Gross income ======================= $ 9,900
Of the $ 17,250 loss produced tax benefit
Problem 6-12 (Algorithmic) (LO. 1) Monty loaned his friend Ned $23,000 three years ago. Ned signed a note and made payme...
Monty loaned his friend Ned $19,000 three years ago. Ned signed a note and made payments on the loan. Last year, when the remaining balance was $14,250, Ned filed for bankruptcy and notified Monty that he would be unable to pay the balance on the loan. Monty treated the $14,250 as a nonbusiness bad debt. Last year before considering the tax implications of the nonbusiness bad debt, Monty had capital gains of $5,700 and taxable income of $33,250. During the...
Calculator Print Item Problem 6-12 (Algorithmic) (LO. 1) Monty loaned his friend Ned $28,000 three years ago. Ned signed a note and made payments on the loan. Last year, when the remaining balance was $21,000, Ned filed for bankruptcy and notified Monty that he would be unable to pay the balance on the loan. Monty treated the $21,000 as a nonbusiness bad debt. Last year before considering the tax implications of the nonbusiness bad debt, Monty had capital gains of...
Exercise 6-1 (Algorithmic) (LO. 1) Last year, Aleshia identified $29,000 as a nonbusiness bad debt. In that tax year before considering the tax implications of the nonbusiness bad debt, Aleshia had $58,000 of taxable income, of which $5,800 consisted of short-term capital gains. This year, Aleshia collected $6,960 of the amount she had previously identified as a bad debt. Determine Aleshia's tax treatment of the $6,960 received in the current tax year. Aleshia includes $ of the collection as
1. On June 2, 2016, Fred’s TV Sales sold Mark a large HD TV, on account, for $12,000. Fred’s TV Sales uses the accrual method. In 2017, when the balance on the account was $8,000, Mark filed for bankruptcy. Fred was notified that he could not expect to receive more than $4,000 on the debt, and he immediately wrote off $4,000 for book purposes. In 2018, final settlement was made and Fred received only $1,000. What is the maximum amount...