Problem 7-29 (Algorithmic) (LO. 1) Monty loaned his friend Ned $10,000 three years ago. Ned signed a note and made payments on the loan. Last year, when the remaining balance was $7,500, Ned filed for bankruptcy and notified Monty that he would be unable to pay the balance on the loate $7,500 as a nonbusiness bad debt. Last year, before considering the tax implications of the nonbusiness bad debt, Monty had capital gains of $3,000 and taxable income of $38,500. During the current year, Ned paid Monty $6,750 in satisfaction of the debt. Determine Monty's tax treatment for the $6,750 received in the current year. The nonbusiness bad debt of $7,500 would have been reported as a , , and s would be included in Monty's gross income this year