MKJ company is 80% owned by David. On January 1 of the current year, MKJ makes a loan of $53,000 to David. The loan carries an interest rate of 4%. The prescribed rate of interest at the time of the loan is 6%. The loan requires that David make annual payments of $21,200, starting in the following taxation year, until the balance is repaid. How much will David recognize in Net Income for Tax purposes related to the loan in the current year? A. 54000 B. 31800 c. 53000 d. 1372
MKJ company is 80% owned by David. On January 1 of the current year, MKJ makes a loan of $53,000 to David. The loan carries an interest rate of 4%. The prescribed rate of interest at the time of the loan is 6%. The loan requires that David make annual payments of $21,200, starting in the following taxation year, until the balance is repaid. How much will David recognize in Net Income for Tax purposes related to the loan in the current year? A. 54000 B. 31800 c. 53000 d. 1372
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
MKJ company is 80% owned by
David.
On January 1 of the current year,
MKJ
makes a loan of
$53,000
to
David.
The loan carries an interest rate of
4%.
The prescribed rate of interest at the time of the loan is
6%.
The loan requires that
David
make annual payments of
$21,200,
starting in the following
David
recognize in Net Income for Tax purposes related to the loan in the current year?
A. 54000
B. 31800
c. 53000
d. 1372
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