please include explanations aswell with answers LITE PROving mor mation applies to the questidisplayed below.]Wally is employed as an executive with Pay MoreIncorporated. To entice Wally to work for Pay More,the corporation loaned him $33,000 at the beginningof the year at a simple interest rate of 1.5percent. Wally would have paid interest of $5,940 thisyear if the interest rate on the loan had been set atthe prevailing federal interest rate.a. Wally used the funds as a down payment on a speedboat andrepaid the $33,000 loan (including $495 of interest) at year-end.Does this loan result in any income to either party?O YesNoIndicate the amount below.Pay MoreWallyGross Income$$33,4955,445 chapter 5 i!SavedHelpSave & Exit SubmitCheck my workRequired information[The following information applies to the questionsdisplayed below.]Wally is employed as an executive with Pay MoreIncorporated. To entice Wally to work for Pay More,the corporation loaned him $33,000 at the beginningof the year at a simple interest rate of 1.5percent. Wally would have paid interest of $5,940 thisyear if the interest rate on the loan had been set atthe prevailing federal interest rate.b. Assume instead that Pay More forgave the loan and interest onDecember 31. What amount of gross income does Wally recognizethis year?Amount to be recognized2

A loan is a financial arrangement in which one or more people, companies, or other entities lend…

Wally is employed as an executive with Pay More Incorporated. To entice Wally to work for Pay More, the corporation loaned him $33,000 at the beginning of the year at a simple interest rate of 1.5 percent. Wally would have paid interest of $5,940 this year if the interest rate on the loan had been set at the prevailing federal interest rate. ally used the funds as a down payment on a speedboat an id the $33,000 loan (including $495 of interest) at year-en s this loan result in any income to either party?