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Business Bad Debt. Elaine is a physician who uses the cash
method of accounting for tax purposes. During the current year, Elaine bills
Ralph $1,200 for office visits and outpatient surgery. Unfortunately, unknown
to Elaine, Ralph moves away leaving no payment and no forwarding address. What
is the amount of Elaine’s bad debt deduction with respect to Ralph’s debt?

Nonbusiness Bad Debt . During 2018, Becky loans her brother
Ken $5,000, which he intends to use to establish a small business. Because Ken
has no other assets and needs cash to establish the business, the agreement
provides that Ken will repay the debt if (and when) sufficient funds are
generated from the business. Becky and Ken do nor establish an interest race.
The business is unsuccessful, and Ken is forced co file for bankruptcy in 2019.
By the end of 2019, it is estimated char the creditors will receive only 20% of
the amount owed. In 2020 the bankruptcy proceedings are closed, and the
creditors receive 10% of the amount due on the debt. What is Becky’s bad debt
deduction for 2019? For 2020?

Bad Debt Deduction . Assume the same facts as in Problem
1:9-53, except that Becky and Ken are not related and that under the terms of
the loan Ken agrees to repay Becky the $5,000 plus interest (at a reasonable
seated rate) over a five-year period. What is Becky’s bad debt deduction for
2019? For 2020?

Net Operating Loss Deduction . Michelle and Mark are married
and file a joint return. Miche lle owns an unincorporated dental practice .
Mark works part-time as a high school math teacher, and spends the remainder of
his time caring for their daughter. During 2019, they report the following
items:
a. What is Miche lle and Mark’s taxable income or loss for
the year?
b. What is Miche lle and Mark’s NOL for the year?

Net Operating Loss. During 2019, Karen, a single taxpayer,
reports the following income and expense items relating to her interior design
business:
Karen also worked part-time during the year, earning $13,500
. She reports a long-term capital gain of $4,200, and a short -term capita l
loss of $3,800. Her itemized deductions total $5,200 .
a. What is Karen’s taxable income or loss for the year?
b. What is Karen’s NOL for the year?

During the current year, Kenneth, who is married, reports
the following income/loss from his business activities:
What is the amount of Kenneth’s excess business loss? How is
the excess business loss treated?