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 $.
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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