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Question 301

For a U.S. bank with domestic and foreign locations, which transaction does NOT require an information return to report the amount of interest paid?

A loan made to James Roberts, a U.S. resident, payable at the bank's New York office, to purchase securities secured by the borrower's home in Mexico

A loan made to Robert and Louise LeBlanc, who are resident aliens, payable at the bank's New York office, secured by a piece of real property located in Canada

A loan made to Smith and Withers, a partnership formed for the practice of law, located in the United States, payable at the bank's New York office, guaranteed by Mr. Smith and Mr. Withers, and secured by the law firm's office building

A loan made by Mrs. West, a U.S. citizen, to purchase a mobile home and the lot on which it will be placed; both the mobile home and lot are located in the United States

Correct Answer: D

The transaction does NOT require an information return to report the amount of interest paid as it pertains to a loan that is specifically made by Mrs. West, a U.S. citizen, to purchase a mobile home and the lot on which it will be placed. Both the mobile home and lot are located in the United States, making it a personal loan transaction within the country.

Discussion

Cam22Option: D

The transaction that does NOT require an information return to report the amount of interest paid is D. A loan made by Mrs. West, a U.S. citizen, to purchase a mobile home and the lot on which it will be placed; both the mobile home and lot are located in the United States. The key distinction here lies in the entity making the loan. The question is slightly misleading because it specifies "A loan made by Mrs. West," which suggests that Mrs. West is the lender rather than the borrower. If the intent was to describe a loan received by Mrs. West from the bank, it's essential to clarify that all loans described are from the bank's perspective.