In 20X1 Jack loaned $10,000 to a small business corporation. By the end of the current year,

Question:

In 20X1 Jack loaned $10,000 to a small business corporation. By the end of the current year, it was established that the loan was bad and that Jack would not be receiving the $10,000 principal. Jack has sheltered $4,000 of capital gains with the capital gains exemption in prior years.
Determine the tax consequences for Jack for the current year. Income tax reference: ITA 39(1)(c), 39(9), 50(1).