Laura makes the following interest-free loans during the current year. Discuss the income tax…

Laura makes the following interest-free loans during the
current year. Discuss the income tax implications of each loan for both Laura
and the borrower. In all cases, the applicable federal interest rate is 8%.

a. On April 15, Laura loans $30,000 to her brother Hyun to
pay his income taxes. Hyun is financially insolvent and has no sources of
investment income.

b. On March 1, Laura loans $12,000 to her secretary, George.
He uses the money as a down payment on a new house.

c. On July 1, Laura loans her father $150,000. He uses the
money to buy a franchise to open a yogurt store. He makes $5
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Laura makes the following interest-free loans during the
current year. Discuss the income tax implications of each loan for both Laura
and the borrower. In all cases, the applicable federal interest rate is 8%.

a. On April 15, Laura loans $30,000 to her brother Hyun to
pay his income taxes. Hyun is financially insolvent and has no sources of
investment income.

b. On March 1, Laura loans $12,000 to her secretary, George.
He uses the money as a down payment on a new house.

c. On July 1, Laura loans her father $150,000. He uses the
money to buy a franchise to open a yogurt store. He makes $5,000 on the yogurt
store during the current year.

d. On January 1, Laura loans $70,000 to Lotta, Inc. She is
the sole shareholder of Lotta, Inc., which is organized as a corporation.

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