Problem 7-33 (Algorithmic) (LO. 1) Monty loaned his friend Ned $16,000 three years ago. Ned signed a note and made payments on the loan. Last year, when the remaining balance was $14,400, Ned filed for bankruptcy and notified Monty that he would be unable to pay the balance on the loan. Monty treated the $14,400 as a nonbusiness bad debt. Last year, before considering the tax implications of the nonbusiness bad debt, Monty had capital gains of $5,760 and taxable income of $35,000. During the current year, Ned paid Monty $12,960 in satisfaction of the debt. Determine Monty's tax treatment for the $12,960 received in the current year. , and $ X would The nonbusiness bad debt of $14,400 would have been reported as a short-term capital loss be included in Monty's gross income this year