Three Years Ago, Sharon Loaned Her Sister $30,000 to Buy

question 34

Multiple Choice

Three years ago, Sharon loaned her sister $30,000 to buy a car.A note was issued for the loan with the provision for monthly payments of principal and interest.Last year, Sharon purchased a car from the same dealer, Hank's Auto.As partial payment for the car, the dealer accepted the note from Sharon's sister.At the time Sharon purchased the car, the note had a balance of $18,000.During the current year, Sharon's sister died.Hank's Auto was notified that no further payments on the note would be received.At the time of the notification, the note had a balance due of $15,500.What is the amount of loss with respect to the note that Hank's Auto may claim on the current year tax return?

• A)$0
• B)$3,000
• C)$15,500
• D)$18,000
• E)None of these.

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