Which of the following is true concerning the tax treatment of interest-free and/or below market interest loans?

a. The foregone interest is treated as income by the borrower.

b. The foregone interest is treated as a gift by the lender and qualifies for the $14,000 annual gift exclusion.

c. The foregone interest is income to the lender.

d. The foregone interest is ignored for both the borrower and lender and should not be reported.