Molly, an entrepreneur, sought a deduction in 2020 for a $30,000 loan she made to a construction co. owned by a friend that filed for bankruptcy in 2021 because of covid-19 lock-down: Molly didn't show that she was in business of lending or that loan became worthless in 2021. Notably, lending wasn't significant activity for Molly; but she did perform a credit check. Your boss told you to look at Fred Cooper, TC Memo 2015-191. In your first paragraph, apply all relevant code and regulation provisions to Molly's situation (as if writing the application of the law). In the second paragraph, apply the Fred Cooper case to Molly's situation.

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