Walt is the sole shareholder and President/COO of MillerCo, Inc. In 2019 MillerCo loaned Walt $450,000 on an interest-free demand loan. The loan was properly documented in the minutes of the Board of Directors and included on the balance sheet of MillerCo as an outstanding note receivable. Under 7872 and the related regulations, this loan will most likely be treated as:

A. As the principal balance is less than $1,000,000, the loan is exempt from the application of 7872.

B. a corporation/shareholder loan.

C. The IRS is likely to ague it is not a true loan and treat the $450,000 as an addtional salary payment.

D. a gift loan.

E. an employer/employee loan.