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What is the tax treatment of this interest expense

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Reference no: EM132656931

Problem - The Robin Corporation is owned as follows:

Isabelle 26%

Peter, Isabelle's husband 19%

Sonya, Isabelle's mother 15%

Reggie, Isabelle's father 25%

Quinn, an unrelated party 15%

Robin is on the accrual basis, and Isabelle and Peter are on the cash basis. Isabelle and Peter each loaned Robin Corporation $40,000 out of their separate funds. On December 31, 2019, Robin accrued interest at 7% on both loans. The interest was paid on February 4, 2020. What is the tax treatment of this interest expense/income to Isabelle, Peter, and Robin?

Reference no: EM132656931

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