Last year, jane identified $87,400 as a nonbusiness bad debt. in that tax year before considering the tax implications of the nonbusiness bad debt, jane had $174,800 of taxable income, of which $8,740 consisted of short-term capital gains. this year, jane collected $17,480 of the amount she had previously identified as a bad debt.

If the account was written off during a previous taxable year, income created for the current year (Jane's acceptance of the $17,0) is subject to the tax benefit rule. She must include this amount in her gross income

Secured loans are protected by collateral security. examples: title loans where the borrower uses the car title as collateral security interest rates are lower and repayments are longer therefore risk is low as a collateral security is given as guarantee to the bank in case of failure to pay the loanunsecured loans are not protected by collateral security but it is given on the creditworthiness of the borrower, trusting that she/he will pay on time. examples; payday loans is a short term loan where the borrower lends money from the bank and pays is back when the borrower receives his/her wages.interest rates are high and repayments are shorter. but the risk is high as no collateral security is given as a guarantee to the bank for payment of the loan