An employee is given a $10,000 interest free loan from an employer on January 1 to purchase an automobile to be used for employment purposes. Due to a serious illness, the automobile is only used for nine months of the year. Assume that the prescribed interest rate is 2% for the entire year

1. Calculate her taxable benefit as it relates to her interest free loan, if the employee re-pays $1000 of her loan on September 30^th

^2. Does the employee need to include a standby charge and operating cost benefit in their taxable income, in this scenario? Briefly explain your answer.

Answer rating: 100% (QA)

Taxable Benefit Calculation 1 Loan Benefit for Used Months Loan amount 10000 Prescribed interest rate 2 Used Months 9 assuming 30 days per month Daily ... View the full answer