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d. On September 30, 2018, Ridge loaned $150,000 to his mother so that she could enter a nursing home. His mother's only income was $9,000 of Social Security benefits and $500 of interest income.

d. On September 30, 2018, Ridge loaned $150,000 to his mother so that she could enter a nursing home. His mother's only income was $9,000 of Social Security benefits and $500 of interest income.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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49. LO.2, 4 Ridge is a generous individual. During the year, he made interest-free loans to various family members when the Federal rate was 3%. What are the tax consequences of the following loans by Ridge: a. On June 30, 2018, Ridge loaned $12,000 to his cousin, Jim, to buy a used truck. Jim's only source of income was his wages on various construction jobs during the year. b. On August 1, 2018, Ridge loaned $8,000 to his niece, Sonja. The loan was to enable her to pay her college tuition. Sonja had $1,200 interest income from CDs her parents had given her. On September 1, 2018, Ridge loaned $25,000 to his brother, Al, to start a busi- ness. Al had $220 of dividends and interest for the year. C. Copyright 2020 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-208 Copyright 2020 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Leaming reserves the right to remove additional content at any time if subsequent rights restrictions require it. PART 2 Gross Income d. On September 30, 2018, Ridge loaned $150,000 to his mother so that she could enter a nursing home. His mother's only income was $9,000 of Social Security benefits and $500 of interest income.
Transcribed Image Text:49. LO.2, 4 Ridge is a generous individual. During the year, he made interest-free loans to various family members when the Federal rate was 3%. What are the tax consequences of the following loans by Ridge: a. On June 30, 2018, Ridge loaned $12,000 to his cousin, Jim, to buy a used truck. Jim's only source of income was his wages on various construction jobs during the year. b. On August 1, 2018, Ridge loaned $8,000 to his niece, Sonja. The loan was to enable her to pay her college tuition. Sonja had $1,200 interest income from CDs her parents had given her. On September 1, 2018, Ridge loaned $25,000 to his brother, Al, to start a busi- ness. Al had $220 of dividends and interest for the year. C. Copyright 2020 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-208 Copyright 2020 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Leaming reserves the right to remove additional content at any time if subsequent rights restrictions require it. PART 2 Gross Income d. On September 30, 2018, Ridge loaned $150,000 to his mother so that she could enter a nursing home. His mother's only income was $9,000 of Social Security benefits and $500 of interest income.
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