Sarah, a Majority Shareholder in Teal, Inc

question 58

Multiple Choice

Sarah, a majority shareholder in Teal, Inc., made a $200,000 interest-free loan to the corporation.Sarah is not an employee of the corporation.

• A)Sarah must recognize imputed interest income and the corporation must recognize imputed interest expense.
• B)Sarah must recognize imputed interest expense and the corporation must recognize imputed interest income.
• C)Sarah must recognize imputed dividend income and the corporation may recognize imputed interest expense.
• D)Neither Sarah's nor the corporation's gross income is affected by the loans because no interest was charged.
• E)None of the above.

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Definitions:

Operations

The execution of tasks and activities in order to run a business or an organization, encompassing a wide range of processes from production to services.

Routing Test

A preliminary test used to determine a respondent's level of knowledge or ability, to direct them to an appropriate level of subsequent testing.

Basal Level

The minimum level of stimulus intensity necessary for detection or the base level of functioning in metabolic or physiological processes.

Ceiling Level

The maximum performance level beyond which a test or measurement cannot accurately assess, indicating that the test may not be challenging enough for some individuals.