ori, a wealthy law firm partner, has an entrepreneurial 18-year-old daughter, Tina. ori is confident...
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ori, a wealthy law firm partner, has an entrepreneurial 18-year-old daughter, Tina. ori is confident a grooming tool that Tina developed will be a huge financial success. ina asked Lori to create an " S " corporation, T2 Inc., to manufacture and sell the roduct. Lori spent five hours setting up T2 Inc., preparing related documents, and iling the S Corporation tax election. Lori's normal billing rate is $1,200 per hour, but he did not charge Tina for the services. In addition, Lori agreed to lend Tina \$1 nillion interest-free. Tina will use the loan proceeds to cover all of her personal expenses during the start-up phase and to finance T2 Inc. Which of the following tatements, in (a) through (d) below, is false? a) Tina will not be taxed on the $6,000 value of the legal services Lori provided to Tina. b) Lori will not be taxed on the $6,000 value of the legal services Lori provided to Tina. c) The loan would be classified as a 7872 "below-market-loan." d) Lori would be taxed on annual interest inclusions even though Tina will not pay Lori any interest on the loan. e) None of the statements in (a) through (d) is false
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