Joyce's employer loaned her $50,000 this year {interest-free} to buy a new car. If the federal interest rate was 3 percent, which of the following is correct?
A. Joyce recognizes $1,500 of taxable interest income.
B. Joyce's employer recognizes $1,500 of deductible interest expense.
C. Joyce recognizes $1,500 of imputed compensation income.
D. Joyce recognizes $1,500 of imputed dividend income.
E. None of the choices are correct.
Answer: C