Final answer:
It is true that a lender is deemed to have received interest income on a below-market gift loan for which the imputed interest rules apply, even if no interest is actually collected.
Step-by-step explanation:
In the case of a below-market gift loan for which there are no exceptions to the imputed interest rules, it is true that the lender is deemed to have received interest income even though no interest is charged and collected. According to the U.S. Tax Code, when a loan is made at a below-market interest rate, the government treats the forgone interest as if it were actually paid. This imputed interest is considered taxable income for the lender and may be treated as a gift for the borrower, depending on the circumstances. Therefore, even if no interest was collected, the lender must report this imputed interest as income on their tax return, which reflects the concept that the tax system seeks to tax income in whatever form it is earned.