With Respect to Shareholder Loans, Which of the Following Statements

question 9

Multiple Choice

With respect to shareholder loans, which of the following statements is true?

• A)A loan by a corporation to a shareholder/employee to purchase shares in the corporation must be documented at the time the loan is made in order to meet one of the conditions necessary to avoid the inclusion of the loan principal as taxable income to the shareholder.
• B)A shareholder/employee of a corporation who is granted a loan by the corporation to purchase shares in the corporation must hold the new shares for five years in order to meet one of the conditions necessary to avoid the inclusion of the loan principal as taxable income.
• C)A shareholder/employee of a corporation who is granted a loan by the corporation to purchase shares in the corporation must repay the loan in one year in order to meet one of the conditions necessary to avoid the inclusion of the loan principal as taxable income.
• D)A loan by a corporation to a shareholder/employee to purchase shares in the corporation must bear interest in order to meet one of the conditions necessary to avoid the inclusion of the loan principal as taxable income to the shareholder.

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Definitions:

Sample

A part of a population selected for measurement, observation, or questioning to provide information about the whole.

Population Frame

A complete list of all the items or individuals in the population to be studied, from which a sample is drawn for research.

Sampling Theory

A field of study concerned with the selection of individual observations intended to yield some knowledge about a population, especially for the purposes of statistical inference.

Participant Selection

The process of choosing individuals to take part in a research study based on certain criteria.