During 2015,Wendy,a biologist,made a bona fide $10,000 loan to her friend Ben when he was in a time of need.Ben dies in 2016.Wendy has been informed by Ben's estate that creditors can expect to receive 40% of amounts owed to them.No payments to creditors are made from Ben's estate in 2016.Wendy's maximum deduction in 2016 is

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Wendy's loan to Ben is a nonbusiness bad debt. Under IRC Sec. 166(d), a nonbusiness bad debt is treated as a short-term capital loss. The maximum amount of a short-term capital loss that can be deducted in any year is $3,000. Since Wendy's loan to Ben is $10,000, she can deduct $3,000 in 2016.

During 2015,Wendy,a Biologist,made a Bona Fide $10,000 Loan to Her