On April 1, 2021, Donner Inc. loans $82,000 to its principal shareholder, Martin Donner, in...
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Accounting
On April 1, 2021, Donner Inc. loans $82,000 to its principal shareholder, Martin Donner, in order to finance his purchases of mind-altering drugs. Doner Inc. has a taxation year that ends on June 30. The loan is interest free. Assume that, during all periods, the relevant prescribed rate is 2 percent.
Required: Determine the tax consequences to Martin if the loan is repaid:
A. On January 1, 2022.
B. On December 31, 2022.
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