Lender makes a $100000 interest-free demand loan to borrower on jan1 at A TIME when applicable federal rate is 5 percent. the proceeds of the loan are used to purchase a principal residence for the borrower. five percent interest compounded semiannually on $100000 is $5063 per annum. Consider the tax consequences to both parties at the end of the year if the loan is still unpaid and is in the nature of ?

 

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If the lender makes an interestfree demand loan to the borrower there are potential tax consequences ... View the full answer