Essay
Willy, who has no income and no investments, borrows $50,000 from his mother at no interest. The applicable federal rate is 4 percent.
a. Explain the tax consequences of this loan if Willy uses the money for an exotic vacation.
b. How would your answer change if Willy uses the money to invest in bonds paying 4 percent interest?
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a. Willy's mother will have no imputed i...View Answer
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