Facts: The grantor, G, was an 80% partner in a partnership. G lent the partnership money for construction financing and received a promissory note on market terms. G conveyed the note to a 10-year reversionary trust with G's children as income beneficiaries and G as the trustee. G then bought out the other partners, becoming sole owner of the partnership assets. G made some interest only payments, which were not computed by reference to the mortgage terms, on the notes to himself, as trustee and some directly to the trust's beneficiaries.

a) What are the tax consequences to the trust of the transactions described above?

b) What are the tax consequences to the grantor of the transactions described above?

c) What are the tax consequences to the trust's beneficiaries of the transactions described above?

sections 674, 675, and 657 need to be applied