Problem 7-32 (Algorithmic) (LO. 1) Monty loaned his friend Ned $30,000 three years ago. Ned signed a note and made payments on the loan. Last year, when the remaining balance was $27,000, Ned filed for bankruptcy and notified Monty that he would be unable to pay the balance on the loan. Monty treated the $27,000 as a nonbusiness bad debt. Last year, before considering the tax implications of the nonbusiness bad debt, Monty had capital gains of $10,800 and taxable income of $54,250. During the current year, Ned paid Monty $24,300 in satisfaction of the debt. Determine Monty's tax treatment for the $24,300 received in the current year. The nonbusiness bad debt of $27,000 would have been reported as a short-term capital loss included in Monty's gross income this year. , and $ would be Feedback Check My Work A nonbusiness bad debt is a debt unrelated to the taxpayer's trade or business either when it was created or when it became worthless.