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:

Influence

The capacity to have an effect on the behavior, development, or character of someone or something.

Value

The importance, worth, or usefulness of something, often determining its desirability or the principles held by individuals or organizations.

Positive Face

The desire or need of an individual to be appreciated and approved by others in social interactions.

Effective Leadership

The ability to inspire and guide individuals or teams towards achieving a common goal through compelling vision, motivation, and strategic action.