On July 1, 2011, Sam Confrey received a five year, $50,000 loan from his employer. The loan was intended to assist Sam with the purchase of a home in…

30.On July 1, 2011, Sam Confrey received a five year, $50,000 loan from his employer. The loan was intended to assist Sam with the purchase of a home in his new employment location. The new home is 47 kilometers closer to Sam’s new work location. The interest rate on the loan was 3 percent. Assume that during the third and fourth quarters of 2011, the relevant prescribed rate of interest is 4 percent. The effect of this transaction on his Taxable Income would be:a) An increase of $250.b) An increase of $500.c) An increase of $750.d) An increase of $2,000.e) No change.31.In December 2008, Arcor Co. advanced funds of $200,000 to Mr. Jones, a new employee of the corporation, to assist him in acquiring a residence when he moved from Newfoundland to commence employment in British Columbia. The loan bears no interest and is to be repaid in full on December 31, 2013. The prescribed interest rate at the time of this advance was 5 percent. Assuming that the prescribed interest rate throughout 2011 was 6 percent, which one of the following represents the increase in Mr. Jones’s Taxable Income in 2011 due to this loan?a) $ 8,750.b) $10,000.c) $10,500.d) $12,000.e) None of the above.

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