Joyce's Employer Loaned Her $50,000 This Year (Interest-Free)to Buy a New

Joyce's employer loaned her $50,000 this year (interest-free) to buy a new car. If the federal interest rate was 3 percent, which of the following is correct?

A) Joyce recognizes $1,500 of taxable interest income.
B) Joyce's employer recognizes $1,500 of deductible interest expense.
C) Joyce recognizes $1,500 of imputed compensation income.
D) Joyce recognizes $1,500 of imputed dividend income.
E) None of the choices are correct.

Correct Answer:

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