Loren loaned a friend $9,000 as financing for a new business venture. In the current year, Loren's friend declares bankruptcy and the debt is considered totally worthless. What amount may Loren deduct on his individual income tax return for the current year as a result of the worthless debt, assuming he has no other capital gains or losses for the year?

a. $9,000 ordinary loss
b. $9,000 short-term capital loss
c. $3,000 short-term capital loss
d. $3,000 ordinary loss
e. $6,000 short-term capital loss
f. $6,000 ordinary loss

Which statement about the cost of the options is true? she would save $1,000 by choosing option b. she would save $5,650 by choosing option a. she would save $11,200 by choosing option b. she would save $11,300 by choosing option a.

A4-year project has an annual operating cash flow of $59,000. at the beginning of the project, $5,000 in net working capital was required, which will be recovered at the end of the project. the firm also spent $23,900 on equipment to start the project. this equipment will have a book value of $5,260 at the end of the project, but can be sold for $6,120. the tax rate is 35 percent. what is the year 4 cash flow?

Peppy knows a lot about marketing, but not much about the legal or financial aspects of starting a new business. he wants to consult with a lawyer and accountant, but his budget is tight with all of the expenses involved in getting peppy's pizzazzeria up and running. peppy should: trust his basic instincts and try to put it together without the advice of lawyers and accountants. delay talking with a lawyer and accountant until the business has established a positive cash flow for at least one year. immediately hire full-time lawyers and accountants for his staff. consult with a lawyer and accountant even though the budget is tight.