Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

plz answer this Q with correct explanations :) 21. Two years ago, Gina loaned Tom $50,000. Tom signed a note the terms of which called

image text in transcribed

plz answer this Q with correct explanations :)

21. Two years ago, Gina loaned Tom $50,000. Tom signed a note the terms of which called for monthly payments of $2,000 plus 6% interest on the outstanding balance. Last year, when the balance owing on the loan was $ 16,000, Tom defaulted on the note. As of the end of last year, there appeared to be no reasonable prospect of Gina recovering the $16,000. As a consequence, Gina claimed the $16,000 as a nonbusiness bad debt. Last year, Gina had AGI of $50,000, which included $14,000 of net long-term capital gains. Gina did not itemize her deductions. During the current year, Tom paid Gina $5,000 in final settlement of the loan. How should Gina account for the payment in the current year? a. File an amended tax return for last year. b. Report no income for the current year. c. Report $5,000 of income for the current year. d. Report $14,000 of income for the current year. e. None of these

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting An Integrated Statements Approach

Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren

2nd Edition

324312113, 978-0324312119

More Books

Students also viewed these Accounting questions

Question

Explain the steps involved in training programmes.

Answered: 1 week ago

Question

What are the need and importance of training ?

Answered: 1 week ago

Question

How did you feel about taking piano lessons as a child? (general)

Answered: 1 week ago