MKJ company is 80% owned by

David.

On January 1 of the current year,

MKJ

makes a loan of

$53,000

to

David.

The loan carries an interest rate of

4%.

The prescribed rate of interest at the time of the loan is

6%.

The loan requires that

David

make annual payments of

$21,200,

starting in the following taxation year, until the balance is repaid. How much will

David

recognize in Net Income for Tax purposes related to the loan in the current year?

A. 54000

B. 31800

c. 53000

d. 1372