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Last year, Abby loaned her friend, Pat, $10,000. Although Pat had signed a note payable that contained interest payments and a maturity date, the loan had not been repaid this year when Pat died insolvent. For this year, assuming that the loan was bona fide, Abby should account for nonpayment of the loan as a(n) _________.A) long-term capital loss
B) short-term capital loss
C) itemized deduction
D) ordinary loss

Respuesta :

sandlee09

Answer:

B) short-term capital loss

Explanation:

Based on the scenario being described within the question it can be said that Abby should account for nonpayment of the loan as a short-term capital loss. This is because since the debt is not part of Abby's business then it is a non-business bad debt which are always accounted as deductibles known as short-term capital losses.