Imputed interest rules and policies include which of the following?
I.Gift loans have no income tax effect to the lender.
II.Any loan of $10,000 or less is exempted from imputed interest rules.
III.On gift loans of $100,000 or less, the imputed interest on the loan cannot exceed the borrower's net investment income for the year.
IV.With a loan to a shareholder, a corporation can deduct the imputed payment.

A)Only statement I is correct.
B)Only statements I and IV are correct.
C)Only statement II is correct.
D)Only statements II, and III are correct.
E)Only statements II, III, and IV are correct.

Question

Imputed interest rules and policies include which of the following?
I.Gift loans have no income tax effect to the lender.
II.Any loan of $10,000 or less is exempted from imputed interest rules.
III.On gift loans of $100,000 or less, the imputed interest on the loan cannot exceed the borrower's net investment income for the year.
IV.With a loan to a shareholder, a corporation can deduct the imputed payment.
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A)Only statement I is correct.
B)Only statements I and IV are correct.
C)Only statement II is correct.
D)Only statements II, and III are correct.
E)Only statements II, III, and IV are correct.

Quizplus · Accepted Answer

Statements II and III are correct. Statement II is accurate because small loans of $10,000 or less are indeed exempt from imputed interest rules under certain conditions. Statement III correctly outlines the limitation on imputed interest for gift loans of $100,000 or less, where the imputed interest cannot exceed the borrower's net investment income for the year. Statement I is incorrect because gift loans can have tax implications under the imputed interest rules, affecting the lender. Statement IV is incorrect because a corporation cannot deduct imputed interest payments as if they were actual payments.

Imputed Interest Rules and Policies Include Which of the Following