Sharon Made a $60,000 Interest-Free Loan to Her Son, Todd

question 57

Multiple Choice

Sharon made a $60,000 interest-free loan to her son, Todd, who used the money to start a new business. Todd's only sources of income were $25,000 from the business and $490 of interest on his checking account. The relevant Federal interest rate was 5%. Based on the above information:

• A) Todd's business net profit will be reduced by $3,000 (.05 × $60,000) of interest expense.
• B) Sharon must recognize $3,000 (.05 × $60,000) of imputed interest income on the below- market loan.
• C) Todd's gross income must be increased by the $3,000 (.05 × $60,000) imputed interest income on the below market loan.
• D) Sharon does not recognize any imputed interest income and Todd does not recognize any imputed interest expense.
• E) None of these is correct.

Understand the concept and applications of various compliance techniques, such as foot-in-the-door and door-in-the-face.

Know the differences between peripheral and central routes to persuasion, including the conditions under which each is effective.

Identify the effects of initial attitudes and requests on subsequent behavior and attitude changes.

Comprehend the sleeper effect in persuasion and the conditions that facilitate its occurrence.

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Definitions:

Drinking on the Job

The act of consuming alcohol while engaged in work-related activities, typically frowned upon or prohibited in most workplaces.

Progressive Discipline

A method of employee discipline in which the severity of the penalty increases with each infraction.

Employment-at-Will Doctrine

A legal principle stating that an employer can fire an employee for any reason (except illegal ones) at any time, and the employee can also leave at any time without reason.

Terminate Employment

The process of ending an individual's employment status with an organization, either by the employer or the employee.