Frank Loaned Emma $5,000 in 2012 with the Agreement That

question 5

Essay

Frank loaned Emma $5,000 in 2012 with the agreement that the loan would be repaid in three years.In 2013,Emma filed for bankruptcy and based on available information from the bankruptcy court,it was estimated that Frank could expect to receive $.65 on the dollar.In 2014,final settlement was made and Frank received $600.
a.Assuming the loan is a business bad debt,what is the amount of and the nature of Frank's deduction in 2013?
b.Assuming the loan is a business bad debt,what is the amount of and the nature of Frank's deduction in 2014?
c.Assuming instead that the loan is a nonbusiness bad debt,what is the amount of and the nature of Frank's deduction in 2013 and 2014?

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Definitions:

Cognitive Perspective

A psychological approach that focuses on how people think, understand, and know about the world.

Evolutionary Perspective

A theoretical approach in psychology that explains human behavior and mental processes in terms of their adaptive value and evolutionary history.

Psychodynamic Perspective

A psychological approach that emphasizes unconscious psychological processes (for example, wishes and fears of which we're not fully aware), and contends that childhood experiences are crucial in shaping adult personality.

Functionalists

Scholars who focus on the function or purpose of societal institutions and processes for the maintenance of a society.