21. Margaret made a $90,000 interest-free loan to her son, Adam, who used the money to retire a mortgage on his personal residence and to buy a certificate of deposit. Adams only income for the year is his salary of $35,000 and $1,400 interest income on the certificate of deposit. Assume the relevant Federal interest rate is 8% compounded semiannually. The loan is outstanding for the entire year.

a. Based on this information, what is the effect of the loan on Margarets gross income for the year? The facts are the same as above except that you discovered that Margaret had made an additional loan of $15,000 to Adam in the previous year. Adam used the funds to pay his childs private school tuition. What are the effects of the loans on Margarets gross income?