Five years ago, Tom loaned his son John $$20,000$ to start a

business. A note was executed with an interest rate of $8\%$

which is the Federal rate. The note required payments of the

interest with the $$20,000$ due at the end of ten years. John

always made the interest payments until last year. During the

current year, John notified his father that he was bankrupt

and would not be able to repay the principal of $$20,000$ or

the accrued interest of $$1,800.$ Tom is an accural basis

taxpayer whose only income is his salary, interest income, and

$$4,000$ of long$-$term capital gain. The proper treatment for

Tom to take regarding the nonpayment of the note on the

current year's tax return is: