Morgan is a 60% shareholder of Danton, Inc. At a time when market interest rates are 8%, the corporation lends

Morgan is a 60% shareholder of Danton, Inc. At a time when market interest rates are 8%, the corporation lends

Question:

Morgan is a 60% shareholder of Danton, Inc.  At a time when market interest rates are 8%, the corporation lends her $62,500 interest free. What are the tax consequences of this transaction to Morgan?

Expert Answer:

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When a corporation lends money to one of its shareholders at below market interest rates it can trig
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