Illustrate what are the tax implications to debra

Assignment Help Financial Accounting

Reference no: EM13130536

Debra is thinking about opening up her own law firm, but she will need some capital to get the practice off the ground. She goes to a bank and borrows $100,000. The loan agreement’s terms include a 30 year maturity (she will have to pay the loan back in 30 years), and an annual interest rate of 7%. Assume that 2 years later the interest rate environment changes and rates increase to 10%. The bank now decides it would rather have $75,000 to lend out at 10% than a $100,000 loan on which it only collects 7%. So, the bank notifies Debra that if she pays back $75,000 immediately, they will forgive her $100,000 loan.

What are the tax implications to Debra if she accepts the bank’s offer?

Reference no: EM13130536

Questions Cloud

Determine daniel income tax liability : Daniel is a calendar-year taxpayer whose wife died in August of 2011. His eight year old son lives with him. During 2011, Daniel had salary income of $67,000, $1600 of qualified dividend income, and received $50,000 from the life insurance policy ..

Advantages and disadvantages of organizational form : Prepare a written memo to Baku and Hanson describing the advantages and disadvantages of each organizational form. Also, from the limited information provided, recommend the organizational form you think they should use.

Explain equations for the reaction of salicylic acid : Give equations for the reaction of salicylic acid with the following: a) acetyl chloride/pyridine b) methanol/HCl/heat c) sodium bicarbonate, room temperature

Good security policy : What are the key components of a good security policy? What are the motivations behind network attacks?

Illustrate what are the tax implications to debra : The bank now decides it would rather have $75,000 to lend out at 10% than a $100,000 loan on which it only collects 7%. So, the bank notifies Debra that if she pays back $75,000 immediately, they will forgive her $100,000 loan. Illustrate what ar..

What percentage of men have weights between given value : The sample mean was found to be 194 pounds with a standard deviation of 11.2 pounds. What percentage of men have weights between 175 and 2235 pounds?

Principal and interest on the debt : One quarter of the principal plus interest is payable on June 30 of each year beginning June 30, 2009. Property owners are assessed to provide the funds to pay the principal and interest on the debt.

Depicts the reaction equation for when sodium carbonate : Show the reaction equation for when sodium carbonate is added to acetic acid Show the reaction equation of acetic acid and dilute sulphuric acid. Potassium manganate is also added.

The dominance of men vs women in mathematics : Topic of Interest: The dominance of men vs women in mathematics (rewrite to make it a stronger topic)

User Account

All Pages