In 2016,Grace Loaned Her Friend Paula $12,000 to Invest in Various

question 109

Multiple Choice

In 2016,Grace loaned her friend Paula $12,000 to invest in various stocks.Paula signed a note to repay the principal with interest.Unfortunately the market for that industry sector plunged,and Paula incurred large losses.In 2017,Paula declared personal bankruptcy and Grace was unable to collect any of her loan.Grace had no other gains or losses last year or this year.The result is

• A)Grace deducts a business bad debt of $12,000 in 2017.
• B)Grace deducts a $12,000 nonbusiness bad debt as a short-term capital loss in 2017.
• C)Grace deducts a $3,000 nonbusiness bad debt as a short-term capital loss in 2017 and carries $9,000 over to subsequent years.
• D)Grace deducts a business bad debt of $3,000 in 2017 and carries $9,000 over to subsequent years.

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Definitions:

Reputation Observation

The process of monitoring and assessing the perception of an entity's character or standing among its peers or in society.

Direct Behavioral Observation

A method of assessing individuals by directly watching their behaviors in natural or structured settings.

Narcissism

A personality characteristic involving arrogance, self-centeredness, and a lack of empathy for others.

Acquaintanceship Effect

A phenomenon that suggests the more people know each other, the more they will like each other.