The Effects of a Below-Market Loan for $100,000 Made by a Corporation

question 2

Multiple Choice

The effects of a below-market loan for $100,000 made by a corporation to its chief executive officer as an enticement to get him to remain with the company are:

• A) The corporation has imputed interest income and the employee is deemed to have received a gift.
• B) The corporation has imputed interest income and dividends paid.
• C) The employee has no income unless the funds are invested and produce investment income for the year.
• D) The employee has imputed compensation income and the corporation has imputed interest income.
• E) None of these.

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Definitions:

Population Boom

Population Boom refers to a rapid increase in the population of a particular area, often as a result of advancements in healthcare and living conditions, leading to challenges in resources and infrastructure.

Infant Mortality

Average number of infant deaths per 1,000 live births in a particular population.

Capitalism

An economic system based on the laws of free market competition, privatization of the means of production, and production for profit.

Privatization

The process of transferring an enterprise or industry from the public sector to the private sector.