Lender makes a $$100,000$ interest$-$free demand loan to Borrower on January $1$ at a time when the

applicable Federal rate is $5$ percent. The proceeds of the loan are used to purchase a principal residence

for Borrower. Five percent interest compounded semiannually on $$100,000$ is $$5,063$ 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:

$($a$)$A gift.

$($b$)$Compensation$.$

$($c$)$A dividend.