Pat, Maria, and Lynn Are Equal Shareholders in Lime Corporation

question 81

Multiple Choice

Pat, Maria, and Lynn are equal shareholders in Lime Corporation. Lime has assets with a basis of $150,000 and a fair market value of $1,200,000. In the current year, Pat lends Lime Corporation $200,000 and Maria lends it $150,000. Both notes bear interest at the rate of 8% per annum. Lime Corporation has no other debt outstanding. Lynn leases machinery to Lime Corporation for an annual rental of $16,000.

• A) The IRS will be successful in reclassifying both loans as equity.
• B) The IRS will be successful in reclassifying the $200,000 loan as equity.
• C) Lime Corporation cannot support its debt-equity ratio.
• D) Because the loans are not pro rata and Lime Corporation can support its debt-equity ratio, the loans should not be reclassified as equity.
• E) None of the above.

Identify factors that contribute to success in life beyond IQ scores.

Understand the difference between achievement and aptitude tests.

Recognize the importance of standardization, validity, and reliability in psychological testing.

Understand the concept of verbal and performance scores in the WAIS.

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Definitions:

Abusive Husbands

Male spouses who engage in physical, emotional, or sexual mistreatment of their partners.

Women

Female adults; often discussed within various social, cultural, and scientific contexts including gender studies.

Incest

Sexual relations between individuals who are closely related that is considered taboo by the norms of society.

Social Isolation

The state of being detached or separated from other people, leading to lack of social interactions and connections.