On January 1, 2020, John made a loan of $6,000 to his neighbor. The loan was evidenced by a written promise to repay the principal within three years and was to bear interest at a rate of 6% per annum. John's neighbor paid interest for the first year only and then his financial condition deteriorated. In 2021, John learned that he would only be able to recover $3,000 of the loan. The loan was not made in the course of John's business. May John deduct $3,000 of the loan on his tax return?
Select one:
a.No deduction is allowed for partial worthlessness of a nonbusiness bad debt
b.Yes, he can deduct $3,000 bad debt expense
c.Yes, he can deduct $3,000 short-term capital loss
d.Yes, he can deduct $3,180 short-term capital loss