Ridge is a generous individual. During the year, he madeinterest-free loans to various family...

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Accounting

Ridge is a generous individual. During the year, he madeinterest-free loans to various family members when the Federalinterest rate was 3%. What are the Federal tax consequences of thefollowing loans by Ridge?

a) On June 30, 2017 Ridge loaned $12,000 to his cousin, Jim, to buya used truck. Jim's only source of income was his wages on variousconstruction jobs during the year.

b) On August 1,2017 Ridge loaned $8,000 to his niece, Sonja. Theloan was meant to enable her to pay her college tuition. Sonjareported $1,200 interest income from CDs that her parents had givenher.

c) On September 1,2017 Ridge loaned $25,000 to his brother, Al, tostart a business. Al reported only $220 of dividends and interestfor the year.

d) On September 30,2017 Ridge loaned $150,000 to his mother so thatshe could enter a nursing home. His mother's only income was $9,000in Social Security benefits and $500 interest income received.

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Solutiona The imputed interest amount forsix months is 180 12000 03 5 However the imputedinterest rules do not apply because the loan was less than100000 and Jim does not have any investment incomeb The See Answer

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In: AccountingRidge is a generous individual. During the year, he madeinterest-free loans to various family members...Ridge is a generous individual. During the year, he madeinterest-free loans to various family members when the Federalinterest rate was 3%. What are the Federal tax consequences of thefollowing loans by Ridge?a) On June 30, 2017 Ridge loaned $12,000 to his cousin, Jim, to buya used truck. Jim's only source of income was his wages on variousconstruction jobs during the year.b) On August 1,2017 Ridge loaned $8,000 to his niece, Sonja. Theloan was meant to enable her to pay her college tuition. Sonjareported $1,200 interest income from CDs that her parents had givenher.c) On September 1,2017 Ridge loaned $25,000 to his brother, Al, tostart a business. Al reported only $220 of dividends and interestfor the year.d) On September 30,2017 Ridge loaned $150,000 to his mother so thatshe could enter a nursing home. His mother's only income was $9,000in Social Security benefits and $500 interest income received.