Peter, proprietor of Peter's Easy Loan Company, loaned Jessie $4,000 on December 1, 2015 . The loan is to be repaid on December 1, 2016, along with $600 interest. On July 10, 2016, Peter learns that Jessie has filed for personal bankruptcy and that non-secured creditors will receive only $0.60 on the dollar. Peter actually receives nothing until February 24, 2017 . On that date, Peter receives a
check for $1,000 from Jessie's bankruptcy proceedings in final settlement of the loan. How should Peter account for the loan to Jessie?
a. $1,600 short-term capital loss in 2016; and $1,400 short-term capital loss in 2017.
b. $3,000 ordinary loss in 2016.
c. $2,400 ordinary loss in 2016.
d. $1,600 ordinary loss in 2016; and $1,400 ordinary loss in 2017.
e. $3,000 short-term capital loss in 2017.
d
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