During 2016, John was the chief executive officer and a shareholder of Maze, Inc. He owned 60% of the outstanding stock of Maze. In 2013, John and Maze, as co borrowers, obtained a $100,000 loan from United National Bank. This loan was secured by John's personal residence. Although Maze was listed as a co-borrower, John repaid the loan in full in 2016. On Maze's form 1120 tax returns, no loans from shareholders were reported. Discuss whether John is entitled to a bad debt deduction for the amount of the payment on the loan.
During 2016, John was the chief executive officer and a shareholder of Maze, Inc. He owned 60% of the outstanding stock of Maze. In 2013, John and Maze, as co borrowers, obtained a $100,000 loan from United National Bank. This loan was secured by John's personal residence. Although Maze was listed as a co-borrower, John repaid the loan in full in 2016. On Maze's form 1120 tax returns, no loans from shareholders were reported. Discuss whether John is entitled to a bad debt deduction for the amount of the payment on the loan.
Chapter7: Deductions And Losses: Certain Business Expenses And Losses
Section: Chapter Questions
Problem 1RP: During 2019, John was the chief executive officer and a share- holder of Maze, Inc. He owned 60% of...
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![During 2016, John was the chief executive officer and a shareholder of Maze, Inc. He owned
60% of the outstanding stock of Maze. In 2013, John and Maze, as co borrowers, obtained a
$100,000 loan from United National Bank. This loan was secured by John's personal residence.
Although Maze was listed as a co-borrower, John repaid the loan in full in 2016. On Maze's form
1120 tax returns, no loans from shareholders were reported. Discuss whether John is entitled
to a bad debt deduction for the amount of the payment on the loan.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faf2a9ee2-d00a-46a8-a17a-dcda911e7434%2F0f1eac4a-f5c7-4fec-a68a-b708c1fe80b8%2Fvk2hcnf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:During 2016, John was the chief executive officer and a shareholder of Maze, Inc. He owned
60% of the outstanding stock of Maze. In 2013, John and Maze, as co borrowers, obtained a
$100,000 loan from United National Bank. This loan was secured by John's personal residence.
Although Maze was listed as a co-borrower, John repaid the loan in full in 2016. On Maze's form
1120 tax returns, no loans from shareholders were reported. Discuss whether John is entitled
to a bad debt deduction for the amount of the payment on the loan.
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