Apply the imputed interest rules in the following situations.

a. Mike loaned his sister Shonda $90,000 to buy a new home. Mike did not charge interest on the loan. The Federal rate was 4%. Shonda earned $900 of investment income for the year.

b. Mandeep’s employer maintains an emergency loan fund for its employees. During the year, Mandeep’s wife Tina was very ill, and he incurred unusually large medical expenses. He borrowed $8,500 from his employer’s emergency loan fund for six months. The Federal rate was 4%. Mandeep and Tina earned no investment income for the year.

c. Jody borrowed $25,000 from her controlled corporation for six months. She used the funds to pay her daughter’s college tuition. The corporation charged Jody 3% interest. The Federal rate was 4%. Jody earned $3,500 of investment income for the year.

d. Kait loaned her son, Jake, $60,000 for six months. Jake used the $60,000 to pay off college loans. The Federal rate was 4%, and Kait did not charge Jake any interest. Jake earned dividend and interest income of $2,100 for the tax year.