Three Years Ago Edna Loaned Carol $80,000 to Help Her

Three years ago Edna loaned Carol $80,000 to help her get started in the TV repair business. Carol gave Edna a 5-year, 9% note with semiannual repayment terms. Edna and Carol have been friends for over 35 years. Edna is a recently retired college professor with a significant portfolio of investments. During the current year, Carol became ill and couldn't continue operating the business. She has repaid $10,000 of the debt owed Edna. Because Carol has no remaining assets, no additional payments will be made to any of her creditors. For the current year, Edna realizes a

A) $- 0 -
B) $70,000 ordinary loss
C) $70,000 long-term capital loss
D) $70,000 short-term capital loss
E) $80,000 ordinary loss

Correct Answer:

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