In January, Zelda borrows $7,000 from her mother for moving expenses and clothes for starting her new job after graduating from college.She told her mother she would pay her 9 percent interest on the money but made no payments in the current year.If the applicable federal interest rate is 5 percent, how much interest income must Zelda's mother recognize?
A)0
B)$233
C)$350
D)$420

Question

Quizplus · Accepted Answer

Since the loan is a gift loan and the amount is less than $10,000, the imputed interest rules do not apply, and Zelda's mother does not have to recognize any interest income.

In January, Zelda Borrows $7,000 from Her Mother for Moving