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Frank Loaned Emma $5,000 in 2013 with the Agreement That

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Essay

Frank loaned Emma $5,000 in 2013 with the agreement that the loan would be repaid in three years.In 2014,Emma filed for bankruptcy and based on available information from the bankruptcy court,it was estimated that Frank could expect to receive $.65 on the dollar.In 2015,final settlement was made and Frank received $600.
a.Assuming the loan is a business bad debt,what is the amount of and the nature of Frank's deduction in 2014?
b.Assuming the loan is a business bad debt,what is the amount of and the nature of Frank's deduction in 2015?
c.Assuming instead that the loan is a nonbusiness bad debt,what is the amount of and the nature of Frank's deduction in 2014 and 2015?


Definitions:

Major Depressive Episode

A period marked by severe depression symptoms that interfere with daily functioning, lasting for at least two weeks.

Hyperfocus

An intense form of mental concentration or visualization that focuses consciousness on a subject, topic, or task.

Major Depressive Disorder

A mental disorder characterized by persistent and severe low mood, low self-esteem, and a loss of interest or pleasure in normally enjoyable activities.

Catatonic

A state of psycho-motor immobility and behavioral abnormality, often found in schizophrenia.

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