Frank Loaned Emma $5,000 in 2014 with the Agreement That

question 40

Essay

Frank loaned Emma $5,000 in 2014 with the agreement that the loan would be repaid in three years.In 2015,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 2016,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 2015?
b.Assuming the loan is a business bad debt,what is the amount of and the nature of Frank's deduction in 2016?
c.Assuming instead that the loan is a nonbusiness bad debt,what is the amount of and the nature of Frank's deduction in 2015 and 2016?

---

Definitions:

Customize

The process of modifying or adapting a product or service to meet specific requirements or preferences of a user.

Local Situation

The specific conditions, attributes, and set of circumstances that prevail in a particular area or environment at a given time.

Organizational Culture

The collective principles, convictions, and standards that affect how workers within a company perceive, experience, and act.

Shared Beliefs

Common values or convictions held by a group of people or within an organization.