Purchase Solution

Imputed interest rules for below-market loans?

Not what you're looking for?

Ask Custom Question

The Cheyenne golf and tennis club requires its members to purchase stock in the corporation and to make a deposit of $10,000. The deposit is to be repaid in 30 years, and no interest is charged. Is the deposit subject to the imputed interest rules for below-market loans?

Purchase this Solution
Solution Summary

The solution details imputed interest rules for below-market loans.

Solution Preview

Internal Revenue Code - Section 7872 elaborates the treatment of below-market loans. Any loan directly or indirectly between a corporation and any shareholder of such corporation is ...

Purchase this Solution
Free BrainMass Quizzes
Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Basics of corporate finance

These questions will test you on your knowledge of finance.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

View More Free Quizzes
Related BrainMass Solutions

  • Interest-Free Gift Loans to Children

    None of the purchases are exempt, for any reason, from the imputed interest rules.

  • This posting addresses debt instrument transactions.

    Because the debt instrument has no ready market and is exchanged for property with a FMV that is indeterminable, the correct treatment would be to use the present value of the debt instrument as an approximation using the imputed interest rate.

  • Acme Company

    Your tutorial, attached in excel, has a full amortization schedule for both notes, one at the imputed rate and the other using the note's actual rate. Entries are shown for purchase and year end interest accrual.

  • Imputed Interest

    301563 Imputed Interest Calculate imputed interest of the following debt. The question really is from the amount of this debt, what is the amount (total) is the imputed interest (not interest rate) of this debt and how do I calculate it?

  • Total explicit, total implicit and total economic costs

    expenses 45,000 Total Operating cost and expenses 555,000 Income from operations 415,000 Interest expenses (bank loans) 45,000 Legal expenses to start business 28,000 Income Taxes 165,000 Net Income

  • Sales margin, capital turnover, ROI, residential income

    b) Capital Turnover = Sales / Average Operating Assets = 900000/750000= 1.20 c) ROI = Income / Invested capital = 90000/750000=0.12 or 12% d) Residual income using imputed cost = Income - Invested capital * imputed interest rate =90000 - 750000

  • Return on Investment

    interest rate 8% A) The ROI is: =Income/Invested Capital =130000/400000 =0.325 =32.5%=Answer B) The residual income is: =Income- Imputed Interest rate *Invested Capital =130000-8%*400,000 =130000-32000 =98000=Answer This provides

  • economic and accounting profits

    Economic cost include all the costs including imputed and foregone/opportunity costs For example a entreprenaur should also take economic cost or imputed costs.

  • Zero coupon bond

    There is no interest paid during the life of the bond. For tax purposes, an imputed interest is calculated which is subject to tax. The imputed interest is calculated as the beginning of year price X yield to maturity.

View More Related Solutions