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Viktor [21]
3 years ago
6

Imputed interest rules apply to term loans or demand loans in which the interest rate is less than the Applicable Federal Rate (

AFR). Which of the following transactions does not fall under these rules? Assume in all situations that interest is below the AFR.
a) Gift loans of $14,000 in which interest foregone is in the form of a gift.
b) Loans in which a principal purpose is to avoid tax.
c) Loans in which the below-market or interest-free loan would have a significant effect on the tax liability of the borrower or lender.
d) Both Gift loans of $14,000 in which interest foregone is in the form of a gift and Loans in which a principal purpose is to avoid tax.
Business
1 answer:
vlada-n [284]3 years ago
7 0

Answer:

A) Gift loans of $14,000 in which interest foregone is in the form of a gift.

Explanation:

You are free to give anyone any type of gift that is worth up to $14,000, this includes gifts in cash, assets (e.g. car) or gift loans. Any gift above that threshold will result in taxes paid by the person that receives the gift.

The IRS defines gift loans under Section 7872(f)(3) as:

<em>“The term “gift loan” is any below-market loan where the forgoing of interest is in the nature of a gift.”</em>

As long as the forgone interest doesn't exceed $14,000, then no taxes should be paid.

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Answer:

The tax on Kaitlyn's capital gain was $100

Explanation:

In order to calculate the tax on Kaitlyn's capital gain we would have to calculate first the Nominal capital gain as follows:

nominal capital gain=$400 - $200

nominal capital gain= $200

Therefore,  tax on Kaitlyn's capital gain= tax percentage×nominal capital gain

                                                                =50%×$200

                                                                =$100

The tax on Kaitlyn's capital gain was $100

6 0
3 years ago
A firm will shut down in the short run if the total revenue that it would get from producing and selling its output is less than
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Answer: A firm will shut down in the short run if the total revenue that it would get from producing and selling its output is less than its C. variable costs.

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3 0
3 years ago
Cecelia’s government provides for her basic needs. In return, Cecelia works in the factory downtown, as she always has since the
Sergeeva-Olga [200]
The correct option is B. In this type of economy the government has total control over allocation of all resources. <span />
8 0
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The assumption that if planning is perfect there is no need for controlling is false.

This is because controlling is a very vital and important part of

management. Controlling helps to organize the various factors needed in

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A management process without any form of control will result in the target

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3 0
2 years ago
Maxim manufactures a hamster food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand. The vari
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Answer:

$6,655

Explanation:

Variable cost per bag = $3.70

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Unit selling price before further processing = $9.05

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5 0
3 years ago
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