On June 2, 2018, Fred’s TV Sales sold Mark a large HD TV on account for $12,000. Fred’s TV Sales uses the accrual method. In 2019, when the balance on the account was $ 8,000, Mark filed for bankruptcy. Fred was notified that he could not expect to receive any of the amount owed to him. In 2020 final settlement was made and Fred received $ 1,000. How much bad debt loss can Fred deduct in 2020?
Mary incurred a $ 20,000 nonbusiness bad debt last year. She also had an $ 18,000 long- term capital gain last year. Her taxable income for last year was $ 25,000. During the current year, she unexpectedly collected $ 12,000 on the debt. How should Mary account for the collection?
Three years ago, Sharon loaned her sister $ 30,000 to buy a car. A note was issued for the loan with the provision for monthly payments of principal and interest. Last year, Sharon purchased a car from the same dealer, Hank’s Auto. As partial payment for the car, the dealer accepted the note from Sharon’s sister. At the time Sharon purchased the car, the note had a balance of $ 18,000. During the current year, Sharon’s sister died. Hank’s Auto was notified that no further payments on the note would be received.
At the time of the notification, the note had a balance due of $ 15,500. What is the amount of loss with respect to the note that Hank’s Auto may claim on the current year tax return?
On September 3, 2019, Able, a single individual, purchased Code Section 1244 stock in Red Corporation from his friend Al for $ 60,000. On December 31, 2019, the stock was Worth $85,000. On August 15, 2020, Able was notified that the stock was worthless. How should Abie report this item on his 2020 tax return?