How does statute 675 apply to the facts below by answering the the three questions? Please indicate what part of the statute provides clarity to the specific question.

1. The grantor, G, was an 80% partner in a partnership. G lent the partnership money for construction financing and received a promissory note on market terms. G conveyed the note to a 10-year reversionary trust with G's children as income beneficiaries and G as trustee. G then bought out the other partners, becoming sole owner of the partnership assets. G made some interest only payments, which were not computed by reference to the mortgage terms, on the notes to himself, as trustee, and some directly to the trust's beneficiaries.

a) What are the tax consequences to the trust of the transactions described above?

b) What are the tax consequences to the grantor of the transactions described above?

c) What are the tax consequences to the trust's beneficiaries of the transactions described above?