ABC Inc. gave an interest-free loan of $200,000 to Jaden who owns 100% of the company. Jaden used the money to buy a sports car that he drives for pleasure. The relevant Federal interest rate is 2%.

1. What would the net taxable income effect be to ABC if they only loaned Jaden $10,000 to put down as a deposit and not the entire $200,000

[ which one is correct? ] No Net Effect on Taxable Income Increase in Net Taxable Income

2. What would the net taxable income effect be to Jaden if ABC only loaned his $10,000 as a deposit and not the entire $200,000

[ which one is correct? ] No Net Effect on Taxable Income Increase in Net Taxable Income