Question $13(1$ point$)$

Five years ago, Tom loaned his son Liam $$20,000$ to start a business. A note was executed with an interest rate of $8\%,$ which is the Federal rate. The note required monthly payments of the interest with the $$20,000$ due at the end of $10$ years. Liam always made the interest payments until last year. During the year, Liam notified his father that he was bankrupt and would not be able to repay the $$20,000$ or the accrued interest of $$1,800.$ Tom is an accrual basis taxpayer whose only income is salary and interest income. The proper treatment for the nonpayment of the note is:

$$3,000$

$$20,000$

No Deduction

$$21,800$