QUESTION FIVE

On March $1,2024,$ Len Horvat receives a $\backslash$$$100,000$ loan from his employer. The loan bears interest at $1\backslash \%$ per year. The interest is payable monthly. The principal is repayable at the end of five years. Len uses $\backslash (\backslash$$ $90,000\backslash )$ of the loan toward the purchase of his home. He uses the remaining $\backslash (\backslash$$ $10,000\backslash )$ to purchase investments. Assume the prescribed interest rates for $2024$ are $\backslash (4\backslash \%\backslash )$ for the first quarter and $\backslash (5\backslash \%\backslash )$ for the remainder of the year.

Determine the amount to be included in Len's employment income for tax purposes for $2024.$

CPA Competency $6\mathrm{.}3\mathrm{.}2$ Employee loans. Income tax reference: ITA $6(9),80\mathrm{.}4(1),(4),(6),80\mathrm{.}5,20(1)($c$).$