Required information [The following information applies to the questions displayed below.] Wally is employed as an executive with Pay More Incorporated. To entice Wally to work for Pay More, the corporation loaned him $42,000 at the beginning of the year at a simple interest rate of 2 percent. Wally would have paid interest of $10,080 this year if the interest rate on the loan had been set at the prevailing federal interest rate. a. Wally used the funds as a down payment on a speedboat and repaid the $42,000 loan (including $840 of interest) at year-end. Does this loan result in any income to either party, and if so, how much? Gross Income Pay More Wally Required information [The following information applies to the questions displayed below.) Wally is employed as an executive with Pay More Incorporated. To entice Wally to work for Pay More, the corporation loaned him $42,000 at the beginning of the year at a simple interest rate of 2 percent. Wally would have paid interest of $10,080 this year if the interest rate on the loan had been set at the prevailing federal interest rate. b. Assume instead that Pay More forgave the loan and interest on December 31. What amount of gross income does Wally recognize this year? Amount to be recognized Required information [The following information applies to the questions displayed below.] Cecil cashed in a Series EE savings bond with a redemption value of $19,000 and an original cost of $13,300. For each of the following independent scenarios, calculate the amount of interest Cecil will include in his gross income assuming he files as a single taxpayer: (Leave no answer blank. Enter zero if applicable.) a. Cecil plans to spend all of the proceeds to pay his son's tuition at State University. Cecil's son is a full-time student, and Cecil claims his son as a dependent. Cecil estimates his modified adjusted gross income at $68,100. Amount of interest to be included in gross income Required information [The following information applies to the questions displayed below.] Cecil cashed in a Series EE savings bond with a redemption value of $19,000 and an original cost of $13,300. For each of the following independent scenarios, calculate the amount of interest Cecil will include in his gross income assuming he files as a single taxpayer: (Leave no answer blank. Enter zero if applicable.) b. Assume the same facts in part (a), except Cecil plans to spend $5,700 of the proceeds to pay his son's tuition at State University, and Cecil estimates his modified adjusted gross income at $63,900. Amount of interest to be included in gross income
