During 2012,Virginia,an Architect,made a Bona Fide $7,500 Loan to Her

question 145

Multiple Choice

During 2012,Virginia,an architect,made a bona fide $7,500 loan to her friend Joe when he was in a time of need.Joe died in 2013.Virginia has been informed by Joe's estate that he was insolvent.Virginia should record the nonpayment of the loan as

• A)An ordinary loss.
• B)An itemized deduction.
• C)A short-term capital loss.
• D)A long-term capital loss.
• E)Nothing. It cannot be deducted.

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Definitions:

Cash Loan

A type of loan where the borrower receives a cash amount upfront and agrees to pay back both the principal and interest over a set period.

Cash Loan

A financial agreement where a borrower receives a specific amount of cash from a lender and agrees to repay it, with interest, over a set period.

Interest to be Collected

The amount of interest income that has been earned but not yet received in cash.

Cash Loan

A short-term loan provided to a borrower in cash, meant to be repaid with interest over a predetermined period.