Problem 7-29 (Algorithmic) (LO. 1) Monty loaned his friend Ned $20,000 three years ago. Ned signed a note and made payments on the loan. Last year, when the remaining balance was $14,000, Ned filed for bankruptcy and notified Monty that he would be unable to pay the balance on the loan. Monty treated the $14,000 as a nonbusiness bad debt. Last year, before considering the tax implications of the nonbusiness bad debt, Monty had capital gains of $5,600 and taxable income of $33,250. During the current year, Ned paid Monty $12,600 in satisfaction of the debt. Determine Monty's tax treatment for the $12,600 received in the current year. and 8,400 x would The nonbusiness bad debt of $14,000 would have been reported as a short-term capital loss be included in Monty's gross income this year. Feedback Check My Work A nonbusiness bad debt is a debt unrelated to the taxpayer's trade or business either when it was created or when it became worthless. Problem 7-29 (Algorithmic) (LO. 1) Monty loaned his friend Ned $20,000 three years ago. Ned signed a note and made payments on the loan. Last year, when the remaining balance was $14,000, Ned filed for bankruptcy and notified Monty that he would be unable to pay the balance on the loan. Monty treated the $14,000 as a nonbusiness bad debt. Last year, before considering the tax implications of the nonbusiness bad debt, Monty had capital gains of $5,600 and taxable income of $33,250. During the current year, Ned paid Monty $12,600 in satisfaction of the debt. Determine Monty's tax treatment for the $12,600 received in the current year. and 8,400 x would The nonbusiness bad debt of $14,000 would have been reported as a short-term capital loss be included in Monty's gross income this year. Feedback Check My Work A nonbusiness bad debt is a debt unrelated to the taxpayer's trade or business either when it was created or when it became worthless