On December 31, 2020, ABC Ltd. made a loan of $250,000 to Mr. Harris, a shareholder/employee of the corporation, to assist him in the purchase of a new home. The loan bears interest at 1% and the interest is paid on a monthly basis. The same arrangement are made for all employees of the company. Bona-fide repayment arrangements were made and the repayments were scheduled within reasonable time limits. The principle amount of the loan is to be repaid in two equal installments starting on January 1, 2022. What is the minimum amount that must be included in Mr. Harris's employment income in 2021 rounded (Ignore any leap years)?

Assume the prescribed rate (per Reg 4301) in the last quarter of 2020 was 3%

The prescribed rates for 2021 were as follows:

2021

1st - 5%

2nd -5%

3rd - 2%

4th - 2%

Group of answer choices

A) $5,000

B) $6,220

C) $6,240

D) $3,740