In 2013 Betty Loaned Her Son,Juan,$10,000 to Help Him Buy

question 93

Multiple Choice

In 2013 Betty loaned her son,Juan,$10,000 to help him buy a car.In 2014,before he repaid the $10,000,Betty told Juan that she was "tearing up" the $10,000 note as a graduation present.How should Juan treat the amount forgiven?

• A)taxable income in year of loan
• B)taxable income in year of forgiveness
• C)excludable gift in year of loan
• D)excludable gift in year of forgiveness

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Definitions:

Closed Out

The process of finalizing all positions in a security or contract, effectively ending all obligations or engagements in those positions.

Hedge

An investment position intended to offset potential losses or gains that may be incurred by a companion investment, a common risk management strategy.

Speculator

An investor who engages in the buying and selling of financial instruments with the aim of profiting from short-term market fluctuations.

Futures Contract

A standardized legal agreement to buy or sell something at a predetermined price at a specified time in the future, typically traded on a futures exchange.