Jennifer Made Interest-Free Gift Loans to Each of Her Four

question 71

Multiple Choice

Jennifer made interest-free gift loans to each of her four children as follows: John borrowed $9,500 to purchase an automobile.His net investment income is $1,500.
Rick borrowed $50,000 to purchase a trailer.His net investment income is $900.
Bert borrowed $25,000 to purchase stock.His net investment income is $1,200.
Elizabeth borrowed $110,000 to purchase a home.Her net investment income is $800.
Assuming a 5% interest rate,on which loans must interest be imputed?

• A)loan to John and Bert
• B)loan to Bert and Elizabeth
• C)loan to Rick,Bert,and Elizabeth
• D)All of the loans are subject to the imputed interest rules.

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Definitions:

Social Facilitation

The tendency for individuals to perform tasks better or more efficiently in the presence of others.

Performance

Performance entails the act of carrying out a task or displaying one's abilities in the context of expectations, standards, or measurements.

Presence Of Other People

The perceptual or actual involvement of additional individuals in a situation, which can influence an individual's behavior or cognitive processes.

Performance

The act of carrying out or accomplishing an action, task, or function.