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Name: ID: A 12. Sharon made a $60,000 interest-free loan to her son, Todd, who used the money to start a new business. Todd's only

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Name: ID: A 12. Sharon made a $60,000 interest-free loan to her son, Todd, who used the money to start a new business. Todd's only sources of net investment income was S490. The relevant Federal interest rate was 5% Based on the above information a. Todd's business net profit will be reducod by $3,000 (0S x $60,000) of interest expense b. Sharon must recognize $3,000 (C05 x $60,000) of imputed interest income on the below- market loan. Todd's gross income must be increased by the $3,000 (05 S60.000) imputed interest income on the below market loan Sharon does not recognize any imputed interest income and Todd does not recognize any imputed interest expense. None of the above is correet. d. e. 13. Todd purchased an annuity for $200,000. The annuity is to pay him $2,500 per month for the rest of his life, with the first payment starting January 1, 2015. His life expectancy is 100 months. Which of the following is correct? Todd is not required to recognize any income until he has collected 80 payments (80 x $2,500-$200,000). a. b. If Todd collects 30 payments and then dics in 2017, Todd's estate should amend his tax c. For each $2,500 payment received in the first year, Todd must include $2,000 in gross d. For each S2,500 payment recived in the first year, Todd must include $500 in gross e. None of the above returns for 2015 and 2 those years 016 and climinate all of the reported income from the annuity for income. income 14. In 2017, Asia had the following transactions Salary Short-term capital gain from a stock investment Student loan interest paid Received repayment of $20,000 loan she made to her brother in 2016 $90,000 4,000 (11,000) (includes no intcrest) State income taxes 20,000 (5,000) Asia's AGI is: a. $83,000. b. $94,000. c. $98,000. d. $103,000. e $114,000

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