Imputed interest rules apply to term loans or demand loans in which the interest rate is less than the Applicable Federal Rate (AFR). Which of the following transactions does not fall under these rules? Assume in all situations that interest is below the AFR.
a) Gift loans of $14,000 in which interest foregone is in the form of a gift.
b) Loans in which a principal purpose is to avoid tax.
c) Loans in which the below-market or interest-free loan would have a significant effect on the tax liability of the borrower or lender.
d) Both Gift loans of $14,000 in which interest foregone is in the form of a gift and Loans in which a principal purpose is to avoid tax.

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Grey company holds an overdue note receivable of $800,000 plus recorded accrued interest of $64,000. the effective interest rate is 8%. as the result of a court-imposed settlement on december 31, year 3, grey agreed to the following restructuring arrangement: reduced the principal obligation to $600,000.forgave the $64,000 accrued interest.extended the maturity date to december 31, year 5.annual interest of $40,000 is to be paid to grey on december 31, year 4 and year 5. the present value of the interest and principal payments to be received by grey company discounted for two years at 8% is $585,734. grey does not elect the fair value option for reporting the debt modification. on december 31, year 3, grey would recognize a valuation allowance for impaired loans of

Newton industries is considering a project and has developed the following estimates: unit sales = 4,800, price per unit = $67, variable cost per unit = $42, annual fixed costs = $11,900. the depreciation is $14,700 a year and the tax rate is 34 percent. what effect would an increase of $1 in the selling price have on the operating cash flow?