Joyce's employer loaned her $50,000 this year (interest-free)to buy a new car.If the federal interest rate was 3%,which of the following is correct?

Question

Quizplus · Accepted Answer

Imputed compensation income refers to the value of non-cash benefits that an employee receives from their employer. In this case, the interest-free loan provided by the employer is a non-cash benefit that Joyce receives, and the value of this benefit is equal to the interest that she would have had to pay if she had taken out a loan from a bank at the federal interest rate of 3%. Therefore, Joyce would recognize $1,500 of imputed compensation income on her tax return.

Joyce's Employer Loaned Her $50,000 This Year (Interest-Free)to Buy a New