ZuoTi.Pro
Question

1. Tom loans $11,000 to his daughter Tina. Why would interest not be imputed on this...

1. Tom loans $11,000 to his daughter Tina. Why would interest not be imputed on this loan?

a. Interest would not be imputed because the loan is less than the amount of the annual exclusion.

b. Interest would not be imputed because loans of $100,000 or less are exempt from both income tax and gift tax consequences.

c. Interest would not be imputed because Tina has unearned income of $500. d. Interest would not be imputed because Tina's earned income is less than $1,000.

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Interest would not be imputed because the loan is less than the amount of the annual exclusion. The IRS mandates that when parents makes loan to child of amount exceeding $14000, the parent must file a gift tax return and if the IRS determines that the interest is owed on the loan amount as per the Federal rates then the interest shall be taxable in the hands of Parent.

0 2
Add a comment
Know the answer?
Add Answer to:
1. Tom loans $11,000 to his daughter Tina. Why would interest not be imputed on this...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Exercise 4-24 (Algorithmic) (LO. 4) Elizabeth made the following interest-free loans during the year. Assume that...

    Exercise 4-24 (Algorithmic) (LO. 4) Elizabeth made the following interest-free loans during the year. Assume that tax avoidance is not a principal purpose of any of the loans. Assume that the relevant Federal rate is 5% and that the loans were outstanding for the last six months of the year. Borrower's Net Investment Income Borrower Amount Purpose of Loan Gift Richard $4,250 $0 Woody $450 $5,100 $153,500 Purchase stock Purchase residence $0 Irene What are the effects of the imputed...

  • Under the imputed interest rules, the taxpayer who makes a below-market loan may be required to...

    Under the imputed interest rules, the taxpayer who makes a below-market loan may be required to recognize income he or she did not actually receive. For example, assume that Christian loans $200,000 to Mia, his daughter, to start a business (income-producing property). Christian does not charge interest because Mia needs the funds to operate a struggling startup business. Why should Christian be required to pay tax on a “made-up” number (i.e., the interest he did not charge)? This type of...

  • Can steps be shown in solving this. Problem 4-33 (LO. 10) Apply the imputed interest rules...

    Can steps be shown in solving this. Problem 4-33 (LO. 10) Apply the imputed interest rules in the following situations. If an amount is zero, enter "0". a. Mike loaned his sister Shonda $90,000 to buy a new home. Mike did not charge interest on the loan. The Federal rate was 4%. Shonda earned $900 of investment income for the year. The imputed amount is $ b. Nico's employer maintains an emergency loan fund for its employees. During the year,...

  • Please explain the below questions 88. Under the terms of a divorce agreement, Ron is to...

    Please explain the below questions 88. Under the terms of a divorce agreement, Ron is to pay his former wife Jill $10,000 per month. The payments are to be reduced to $7,000 per month when their 15 year-old child reaches age 18. During the current year, Ron paid $120,000 under the agreement. Assuming all of the other conditions for alimony are satisfied, Ron can deduct from gross income (and Jill must include in gross income) as alimony: a. $120,000. b....

  • 1. Jim gave Betsy, his daughter, $1,200,000 on 1/1/20XX, which she used as a cash contribution...

    1. Jim gave Betsy, his daughter, $1,200,000 on 1/1/20XX, which she used as a cash contribution to become a member of BJS, LLC. Calculate the gift tax, if any that Jim would need to pay for the current tax year. 2. Alternatively, assume a note was signed by Betsy stating that the $1,200,000 given to her by her father would be returned to him in 5 years. Calculate the gift tax, if any, in this case along with the interest...

  • QUESTION 1 Tom, age 13, is claimed as a dependent by his parents. Tom has unearned...

    QUESTION 1 Tom, age 13, is claimed as a dependent by his parents. Tom has unearned income of $3,400 and $300 of income from mowing lawns in the neighborhood. If the first $2,600 of Tom's net unearned income is taxed at 10%, what is Tom’s 2019 income tax liability? a. None of these b. $260 c. $370 d. $0 e. $459 QUESTION 2 The 3.8 percent ACA Medicare tax does not apply to: a. Wages b. Interest c. Capital gains...

  • How can congressional committee reports be used by a tax researcher? 1) Jerry purchased a U.S....

    How can congressional committee reports be used by a tax researcher? 1) Jerry purchased a U.S. Series EE savings bond for $744. The bond has a maturity value in 10 years of (1pts) $1,000 and yields 3% interest. This is the first Series EE bond that Jerry has ever owned. a. Jerry can defer the interest income until the bond matures in 10 years. b. Jerry must report $25.60[($1,000 - $744)/10] interest income each year he owns the bond. c....

  • Manistee Corporation reported taxable income of $1,200,000 this year and paid federal income taxes of $408,000....

    Manistee Corporation reported taxable income of $1,200,000 this year and paid federal income taxes of $408,000. Not included in the computation was disallowed entertainment expenses of $25,000, tax-exempt interest of $20,000, and a net capital loss of $50,000 incurred this year. Manistee is an accrual basis taxpayer. The corporation’s current earnings and profits this year would be: Multiple Choice $1,200,000 $1,145,000 $787,000 $737,000 Boulder Company reports current E&P of $500,000 this year and accumulated negative E&P at the beginning of...

  • Comprehensive Problem Dick and Tina Bench live at 230 Main Street, Platteville, WI 53818, and their...

    Comprehensive Problem Dick and Tina Bench live at 230 Main Street, Platteville, WI 53818, and their Social Security numbers are 233-43-4523 and 342-22-3476. They have one child, Tony, who is eight years old. Tony's Social Security number is 456-34-6578. Dick's salary from a night guard job and income tax withholding for the year are as follows: Wages $56,000 Interest earned on savings account 1,600 Federal income tax withheld 5,000 State income tax withheld 2,000 Dick contributed $4,000 to his IRA...

  • Part B. Gross Income Inclusions & Exclusions For each Q-6 through Q-19 below, determine whether the...

    Part B. Gross Income Inclusions & Exclusions For each Q-6 through Q-19 below, determine whether the item described should be INCLUDED IN or EXCLUDED FROM the Gross Income of the taxpayer who receives the item. • Darken Box A on the Scantron sheet if the item should be INCLUDED IN gross income • Darken Box B on the Scantron sheet if the item should be EXCLUDED FROM gross income 6. $25,000 scholarship for tuition and books received by a full-time...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT