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On October? 1,Bill lends Aaron $8 million.Aaron signs an? interest-free demand note. The loan is still outstanding on December 31. Requirement Explain the income tax

On October? 1,Bill lends Aaron $8 million.Aaron signs an? interest-free demand note. The loan is still outstanding on December 31.

Requirement

Explain the income tax and gift tax consequences of the loan to both Bill and Aaron.Assume that the federal? short-term rate is 4%.

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