On January 1 Patti made a $90,000 interest-free loan to her son, Alex, who used the money to pay off the $40,000 mortgage on his personal residence and also to buy a $50,000 certificate of deposit. Alex's only income for the year is his salary of $45,000 and $8,100 Federal I- BOND interest income on the certificate of deposit (9% WOW!). The relevant Federal interest rate is 3% compounded semiannually. The loan is outstanding for the entire year. Based on the above information, what is the effect of this loan on Patti's gross a.

On January 1 Patti made a $90,000 interest-free loan to her son, Alex, who used the money to pay off the $40,000 mortgage on his personal residence and also to buy a $50,000 certificate of deposit. Alex's only income for the year is his salary of $45,000 and $8,100 Federal I- BOND interest income on the certificate of deposit (9% WOW!). The relevant Federal interest rate is 3% compounded semiannually. The loan is outstanding for the entire year. Based on the above information, what is the effect of this loan on Patti's gross a.

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter4: Gross Income: Concepts And Inclusions

Section: Chapter Questions

Problem 25CE

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