Which of the Following Interest-Free Loans Is Subject to the Imputed

Multiple Choice

Which of the following interest-free loans is subject to the imputed interest rules?
I.Lena needed $5,000 to pay off some gambling debts. Her employer loans her the $5,000.
II.Sherry loans her son $130,000 to purchase a motor home to use in his landscaping business. Her son has no investment income for the year.
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A) Only loan I.
B) Only loan II.
C) Both loans.
D) Neither loan.