12) A cash-basis taxpayer made a bona fide, nonbusiness loan to an acquaintance in Year 1. At the end of Year 2, it is determined that the taxpayer will likely be able to collect only 20% of the principal, although nothing has been collected by the end of the year. How should the loss be treated for tax purposes in Year 2?

1. 80% deductible in Year 2, up to $3,000
2. None of the loss is deductible in Year 2
3. 80% deductible in Year 2, without limitation
4. 100% deductible in Year 2, up to $3,000

17) Talbot purchased a laptop for $1,500. The laptop is used solely for his self-employment business. Two years later, Talbot experienced serious financial difficulty and sold the laptop for $1,000, sustaining a $500 loss. What is the character of the loss?

1. Section 1245 loss
2. Capital loss
3. Casualty loss
4. Section 1231 loss