Last year, Jane identified $77,600 as a nonbusiness bad debt. In that tax year b

Question

Last year, Jane identified $77,600 as a nonbusiness bad debt. In that tax year before considering the tax implications of the nonbusiness bad debt, Jane had $155,200 of taxable income, of which $7,760 consisted of short-term capital gains. This year, Jane collected $15,520 of the amount she had previously identified as a bad debt.

Hint: Section 111(c) applies in this situation.

Jane treats the $77,600 nonbusiness bad debt as of which $ is carried over to the current year. Jane would have to include $ of the collection in gross income in the current year, resulting in a remaining carryover of $.

Explanation / Answer

Jane treats the $77,600 nonbusiness bad debt as of which $66840 is carried over to the current year.

jane would have to include $15520 of the collection in gross income in the current year,

resulting in a remaining carryover of $48320

Particulars Amount($) Non Business Bad Debt 77600 Less : Short Term Capital Gains (7760) Less : Deduction from other income (3000) Balance 66840 Less : Collection against Non Business Debt (15520) Balance 51320 Less : Deduction from other income (3000) Balance Carried Forward 48320

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