LO.1 In 2011, Juan entered into a contract to write a book. The publisher advanced Juan $50,000, which was to be repaid out of future royalties. If the book was not completed by the end of 2012, however, Juan would be required to repay the publisher for the advance. Juan did not complete the book in 2012, and in accordance with the agreement, he repaid the $50,000 to the publisher in 2013. Juan is a cash basis taxpayer. His marginal tax rate was 35% in 2011 and 15% in 2013. What are the tax consequences to Juan of the repayment?