Mary Incurred a $20,000 Nonbusiness Bad Debt Last Year

question 9

Multiple Choice

Mary incurred a $20,000 nonbusiness bad debt last year. She also had an $18,000 long-term capital gain last year. Her taxable income for last year was $25,000. During the current year, she unexpectedly collected $12,000 on the debt. How should Mary account for the collection?

• A) $0 income
• B) $8,000 income
• C) $11,000 income
• D) $12,000 income
• E) None of the above

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Definitions:

Cartilaginous Joints

Type of joint where the bones are united by cartilage, allowing for more limited movement than synovial joints.

Gomphosis

A type of joint that binds the teeth to bony sockets in the maxillary bone and mandible.

Peg-In-Socket

Refers to a type of joint or connection where a projecting part fits into a corresponding hole, often used in engineering and orthopedics.

Fibrous Joint

A type of joint where bones are joined by dense connective tissue, typically allowing for little to no movement.