(Answered) Joshua loans his son seth 100000 interest-free for five

Economics

Joshua loans his son, Seth, $100,000 interest-free for five years. Seth uses the money for a down payment on his home. Assume that the applicable federal rate of interest is 5 percent.

a. What are the tax consequences of this loan to Joshua and to Seth?

b. How would your answer change if Seth uses the money to invest in corporate bonds paying 8 percent annual interest?

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Macroeconomics, Economics

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