Question: Diana borrowed $ 1 4 , 0 0 0 from DI to purchase a car. DI charged her 2 percent interest ( $ 2 8

Diana borrowed $

14, 000

from DI to purchase a car. DI charged her

2

percent interest

(

280)

on the loan, which Diana paid on December

31 .

DI would have charged Diana $

920

if interest had been calculated at the applicable federal interest rate. Assume that tax avoidance was not a motive for the loan. Is any of this taxable gross income?

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