Janine's employer loaned her $5,000 this year {interest-free} to buy a used car. If the federal interest rate was 4 percent, which of the following is correct?
A. Janine recognizes $200 of taxable interest income.
B. Janine's employer recognizes $200 of deductible interest expense.
C. Janine recognizes $200 of imputed compensation income.
D. Janine recognizes $200 of imputed dividend income.
E. None of the choices are correct.
Answer: E