Problem:
The question is as follows:
Celeste had one of her best employees leaving town to get away from a troublesome ex husband. In order for her friend to establish a business elsewhere, in March 2007 Celeste loaned her $7,000 on a 6% note to be paid back in one year. On December 30, 2008 Celeste found out that her employee had filed for bankruptcy and was awaiting trial on felony theft charges. Celeste has never received any interest on the loan.
How would Celeste would report this on her 2008 Tax return.