92. The effects of a below-market loan for $100,000 made by a corporation to its chief executive officer as an
enticement to get him to remain with the company are:
a. The corporation has imputed interest income and the employee is deemed to have received a gift.
b. The corporation has imputed interest income and dividends paid.
c. The employee has no income unless the funds are invested and produce investment income for the year.
d. The employee has imputed compensation income and the corporation has imputed interest income.
e. None of these.
The corporation made a compensation related loan. It has imputed interest income and
compensation expense. The employee has imputed interest expense and compensation income.
Since the loan is for $100,000, the $10,000 exception does not apply.
93. Sharon made a $60,000 interestfree loan to her son, Todd, who used the money to start a new business. Todd’s
only sources of income were $25,000 from the business and $490 of interest on his checking account. The
Federal interest rate was 5%. Based on the above information:
94. Jay, a single taxpayer, retired from his job as a public school teacher in 2014. He is to receive a retirement
of $1,200 each month and his life expectancy is 180 months. He contributed $36,000 to the pension
plan during his
35-year career; so his adjusted basis is $36,000. Jay collected 192 payments before he died.
What is the correct
method for reporting the pension income?