1. George (an 80% shareholder) has made loans to Mountainview Corporation that become worthless in the current year. George is not employed by Mountainview.

a.George is not permitted a deduction for the worthless loans.

b.George may claim an ordinary loss as to the worthless loans.

c.The loans provide a nonbusiness bad debt deduction to George in the current year.

d.The loans provide George with a business bad debt deduction.

e.None of these choices are correct.

Please provide an explanation of why it would be a business or nonbusiness bad debt (if answer is c or is d). Thank you.