In 2017 Bonnie,a Sole Proprietor,loaned Her Employee,John,$10,000 to Help Him

question 3

Multiple Choice

In 2017 Bonnie,a sole proprietor,loaned her employee,John,$10,000 to help him buy a car.In 2019,before he repaid the $10,000,Bonnie told John that she was "tearing up" the $10,000 note in recognition of his strong job performance.How should John treat the amount forgiven?

• A)taxable income in year of loan
• B)taxable income in year of forgiveness
• C)excludible gift in year of loan
• D)excludible gift in year of forgiveness

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Definitions:

Maladaptive Behavior

Actions or tendencies that are counterproductive to oneself or others, often reducing the ability to adequately face and deal with situations.

Personal Distress

A negative emotional response to witnessing the suffering of others, leading to a desire to alleviate that suffering.

Etiology

The study and analysis of the causes or origins of diseases or conditions.

Obsessive-Compulsive Disorder

A disorder characterized by unwanted, recurring thoughts (obsessions) and repetitive behaviors (compulsions) that the individual feels driven to perform.