1. Nabeel owned a special purpose boat for use in a fishing business. The boat originally cost $9,000 and had a basis of $-0-. The boat that was worth $5,200 at the time was totally destroyed when it was blown by strong winds into large rocks.

How much can Nabeel deduct related to this casualty? Is this a deduction for AGI or from AGI?

2. Yeji frequently makes loans to suppliers that are suffering financial problems. At the beginning of the year, Yeji had outstanding loans of $8,000, $2,200 of which Yeji believed were uncollectable. At the end of the year, Yeji had outstanding loans of $6,000, $1,200 of which Yeji believed were uncollectable. During the year, Yeji determined that $1,800 of specific loans were worthless.

How much is Yejis bad debt deduction?

How would your answer differ if the debts were non-business debts?