(Answered) Sheldon corporation loans 80000 interest-free for one year

Economics

Sheldon Corporation loans $80,000 interest-free for one year to Lynn, an employee. Assume that the applicable federal rate of interest is 5 percent. Lynn uses the loan to pay for personal debts. What are the tax consequences of this loan to Sheldon and to Lynn? How would your answer change if Lynn was a shareholder of Sheldon Corporation?

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