Martin Locks Owns 100 Percent of the Shares of Locks

Martin Locks owns 100 percent of the shares of Locks Inc., a corporation with a December 31 year end. In January 2019, the corporation loans Martin $350,000 in order to assist him in acquiring a new principal residence. The loan is interest free and will be paid back on January 1, 2021. While small loans are made to other employees of the Company, a loan of this size is only available to Martin. Assume that the prescribed rate is 4 percent throughout 2019 and 5 percent throughout 2020. Which of the following statements is correct?

A) Martin will have to include $350,000 in his 2019 Net Income For Tax Purposes.
B) Martin will have to include $14,000 in his Net Income For Tax Purposes in both 2019 and 2020.
C) Martin will have to include $14,000 in his Net Income For Tax Purposes for 2019 and $17,500 in his Net Income For Tax Purposes for 2020.
D) Martin will have an inclusion in his 2019 Net Income For Tax Purposes, only if the loan is not repaid on December 30, 2020.