Question

A below-market loan (e.g., from an employer to an employee) is a common example of a transaction that generates taxable imputed income.

a. True
b. False

Answer 1

This is true. With a below-market loan, the recipient has received a fringe benefit and would be considered to have earned imputed income. If the amount of the loan was over $50,000, then the recipient would have to claim this income on their next income tax statement as such and pay the appropriate taxes on it.