I just need introduction part for this question because already I have solution for this question.definetly will upvote. 49. LO.2, 4 Ridge is a generous individual. During the year, he made interest-free loansto various family members when the Federal rate was 3%. What are the taxconsequences of the following loans by Ridge:a. On June 30, 2018, Ridge loaned $12,000 to his cousin, Jim, to buy a used truck.Jim's only source of income was his wages on various construction jobs duringthe year.b. On August 1, 2018, Ridge loaned $8,000 to his niece, Sonja. The loan was toenable her to pay her college tuition. Sonja had $1,200 interest income fromCDs her parents had given her.On September 1, 2018, Ridge loaned $25,000 to his brother, Al, to start a busi-ness. Al had $220 of dividends and interest for the year.C.Copyright 2020 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-208Copyright 2020 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Leaming reserves the right to remove additional content at any time if subsequent rights restrictions require it.PART 2 Gross Incomed. On September 30, 2018, Ridge loaned $150,000 to his mother so that she couldenter a nursing home. His mother's only income was $9,000 of Social Securitybenefits and $500 of interest income.

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Imputed Interest:- It is an interest that the lender assumes that he or she will receive to let out…