1. Thomas loaned a friend, Susan, $10,000 for a down payment on a home. Thomas and Susan signed a note in which Susan agreed to pay $100 a month with an interest rate of 4% until the loan was completely paid. Susan lost both her job and her home in 2019. In 2020, Susan filed for bankruptcy and went to live with her mother. Thomas sued Susan in court for nonpayment in August 2020, but the court ruled the debt unenforceable because it had been discharged in bankruptcy. When Susan defaulted, the outstanding balance due on the note was $7,000. If Thomas had only wage income reportable during the year, how much would his deductible bad debt be in 2020, assuming that Thomas elected to treat the loss as a nonbusiness ordinary loss arising from a transaction entered into for profit?
2. 
   
3. A.$7,000
4. 
   
5. B.$6,900
6. 
   
7. C.$3,000
8. 
   
9. D.$10,000

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