Question
Martin Locks owns 100 percent of the shares of Locks Inc., a corporation with a December 31 year end.In January 2019, the corporation loans Martin
Martin Locks owns 100 percent of the shares of Locks Inc., a corporation with a December 31 year end.In January 2019, the corporation loans Martin $350,000 in order to assist him in acquiring a new principal residence.The loan is interest free and will be paid back on January 1, 2021.While small loans are made to other employees of the Company, a loan of this size is only available to Martin.Assume that the prescribed rate is 4 percent throughout 2019 and 5 percent throughout 2020.
What are the tax consequences of this transaction to Martin in 2019, 2020 and 2021?
Plz show the calculation!! thx
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Managerial Accounting Tools for business decision making
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
6th Edition
978-0470477144, 1118096894, 9781118214657, 470477148, 111821465X, 978-1118096895
