Tracey made a $$60,000$ interest$-$free loan to a child, Tenoch, who used the money to start a new business. Tenoch's only sources of income were $$25,000$ from the business and $$490$ of interest on a checking account. The relevant Federal interest rate was $5\%.$ Based on the above information:

a$.$ Tenoch's gross income must be increased by the $$3,000(0\mathrm{.}05\backslash$times $$60,000)$ imputed interest income on the below$-$market loan.

b$.$ Tracey does not recognize any imputed interest income, and Tenoch does not recognize any imputed interest expense.

c$.$ Tracey and Tenoch both recognize imputed interest income and imputed interest expense.

d$.$ Tenoch's business net profit will be reduced by $$3,000(0\mathrm{.}05\backslash$times $$60,000)$ of interest expense.

e$.$ Tracey must recognize $$3,000(0\mathrm{.}05\backslash$times $$60,000)$ of imputed interest income on the below$-$market loan.