Non payment of loan
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Last year, Abby loaned Pat $10,000 as a gesture of their friendship. Although Pat had signed a note payable that contained interest payments and a maturity date, the loan had not been repaid this year when Pat died insolvent. For this year, assuming that the loan was bona fide, Abby should account for nonpayment of the loan as a(n):
A. itemized deduction.
B. ordinary loss.
C. long-term capital loss.
D. short-term capital loss.
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Solution Summary
This solution identifies the correct answer to the nonpayment question listed. The appropriate IRS reference is also included.
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