Problem 6-12 (Algorithmic) (LO. 1) Monty loaned his friend Ned $28,000 three years ago. Ned signed a note and made payments on the loan. Last year, when the remaining balance was $19,600, Ned filed for bankruptcy and notified Monty that he would be unable to pay the balance on the loan. Monty treated the $19,600 as a nonbusiness bad debt. Last year before considering the tax implications of the nonbusiness bad debt, Monty had capital gains of $7,840 and taxable income of $35,000. During the current year, Ned paid Monty $17,640 in satisfaction of the debt. Determine Monty's tax treatment for the $17,640 received in the current year. The nonbusiness bad debt of $19,600 would have been reported as a short-term capital loss , and $ 10,360 X would be included in Monty's gross income. Feedback Check My Work A nonbusiness bad debt is a debt unrelated to the taxpayer's trade or business either wh became worthless