80.

Tom lent $10000 to a friend in January 2015. In June 2016, his friend declared bankruptcy and had this loan discharged under the bankruptcy code. Tom had no legal objection to the bankruptcy. Tom had no other capital transactions in 2016. Regarding the effect on Tom's adjusted gross income on his 2016 tax return, which of the following is TRUE? ( A) Tom may take a $10,000 short-tern capital loss as a non-business bad debt. O B) Tom may take a $3,000 short term capital loss as a non-business bad debt. ( C) Tom may take a $3,000 long-term capital loss as a non-business bad debt. ( D) Tom may deduct no bad debt loss because he failed to pursue reasonable collection action against his friend to collect the debt. O E) Tom may take a $10,000 long-term capital loss as a non-business bad debt