Question

Last year Aleshia identified $15,000 as a nonbusiness bad debt. In that tax year, before considering the tax implications of the nonbusiness bad debt, Aleshia had $100,000 of taxable income, of which $12,000 consisted of short-term capital gains. This year Aleshia collected $8,000 of the amount she had previously identified as a bad debt. Determine Aleshia’s tax treatment of the $8,000 received in the current tax year.

Answer 1

Aleshia’s tax treatment of the $8,000 received in the current tax year is $8,000

Step-by-step explanation:

Aleshia identified bad debt in nonbusiness = $15000

taxable income = $100,000

Short term capital gains = $12,000

Aleshia collected amount = $8,000

from the information:

Last year income = current Year income

gross income of current year = $8,000

Therefore, Aleshia’s tax treatment of the $8,000 received in the current tax year is $8,000