Two years ago,James loaned $60,000 to his friend.The debt is now uncollectible.If the loan created a bona fide debt,James recognizes a short-term capital loss.

Name: Two years ago,James loaned $60,000 to his friend.The debt is now uncollectible.If the loan created a bona fide debt,James recognizes a short-term capital loss.
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Question

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A bona fide debt that becomes uncollectible is treated as a short-term capital loss if it was a non-business bad debt, which is typically the case for personal loans.

Two Years Ago,James Loaned $60,000 to His Friend