Father made an interest-free loan of $25,000 to Son who used the money to buy an SUV. Son had $1,600 interest income from a certificate of deposit for the year. Father is not required to impute interest income
a. True
b. False
Indicate whether the statement is true or false
False
RATIONALE: The loan is classified as a gift loan. Since the amount of the loan is greater than $10,000, the imputed interest rules apply. However, since the loan is not greater than $100,000, the imputed interest is limited to Son's net investment income of $1,600.
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