Solution for QID #27420: Silvia made a $70,000 interest-free loan to her son, Alex, w | StudyHelpMe

Silvia made a $70,000 interest-free loan to her son, Alex, who used the money to start a new business. Alex's only sources of income were $20,000 from the business and $390 of interest on his checking account. The relevant Federal interest rate was 4%. Based on the above information:   a)Alex's business net profit will be reduced by $2,800 (.04 × $70,000) of interest expense. b)Silvia must recognize $2,800 (.04 × $70,000) of imputed interest income on the below-market loan. c)Alex's gross income must be increased by the $2,800 (.04 × $70,000) imputed interest income on the below market loan. d)Silvia does not recognize any imputed interest income and Alex does not recognize any imputed interest expense.