Monty loaned his friend Ned $26,000 three years ago. Ned signed a note and made payments on the loan. Last year, when the remaining balance was $20,800, Ned filed for bankruptcy and notified Monty that he would be unable to pay the balance on the loan. Monty treated the $20,800 as a nonbusiness bad debt. Last year, before considering the tax implications of the nonbusiness bad debt, Monty had capital gains of $8,320 and taxable income of $49,000. During the current year, Ned paid Monty $18,720 in satisfaction of the debt. Determine Monty's tax treatment for the $18,720 received in the current year. The nonbusiness bad debt of $20,800 would have been reported as a short-term capital loss , and $fill in the blank 2 would be included in Monty's gross income.