Question
An employee is given a $10,000 interest free loan from an employer on January 1 to purchase an automobile to be used for employment purposes.
An employee is given a $10,000 interest free loan from an employer on January 1 to purchase an automobile to be used for employment purposes. Due to a serious illness, the automobile is only used for nine months of the year. Assume that the prescribed interest rate is 2% for the entire year
1. Calculate her taxable benefit as it relates to her interest free loan, if the employee re-pays $1000 of her loan on September 30th
2. Does the employee need to include a standby charge and operating cost benefit in their taxable income, in this scenario? Briefly explain your answer.
Step by Step Solution
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Step: 1
Taxable Benefit Calculation 1 Loan Benefit for Used Months Loan amount 10000 Prescribed interest rate 2 Used Months 9 assuming 30 days per month Daily ...
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
