In the Case of a Below-Market Loan Between Family Members

Multiple Choice

In the case of a below-market loan between family members, if the imputed interest rules apply, which of the following is not true?

A) The borrower must recognize interest income.
B) The lender must recognize interest income.
C) The borrower is deemed to have received a gift.
D) The lender is deemed to have made a gift.
E) None of the above is true.