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Non-business Bad Debt. in 2011, Becky loans her brother Ken 5000, which he intends to use to found a small business. Because Ken has no other assets and requires the cash to expand the business, the agreement provides that Ken will repay the debt if (and when) sufficient funds are prepared from the business. No interest rate is agreed upon. The business sins unsuccessful and Ken is forced to file for bankruptcy in 2012. By end of 2012 it is evaluated that the creditors will receive only 20 percent of the amount owed. In 2013 the bankruptcy proceedings are closed, and creditors receive 10 percent of the amount due on the debt. What is Becky's bad debt deduction for 2012? For 2013?
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