What the proper treatment for the nonpayment of the note is


Five years ago, Tom loaned his son John $20,000 to start a business. A note was executed with an interest rate of 8%, which is the Federal rate. The note required monthly payments of the interest with the $20,000 due at the end of ten years. John always made the interest payments until last year. During the current year, John notified his father that he was bankrupt and would not be able to repay the $20,000 or the accrued interest of $1,800. Tom is a cash basis taxpayer whose only income is salary and interest income. what the proper treatment for the nonpayment of the note is:

Request for Solution File

Ask an Expert for Answer!!
Accounting Basics: What the proper treatment for the nonpayment of the note is
Reference No:- TGS084750

Expected delivery within 24 Hours