Karl is an employee of Cars－R－Us.As part of their employment agreement, Cars－R－Us loa

Karl is an employee of Cars-R-Us.As part of their employment agreement, Cars-R-Us loans Karl $1,000,000 interest-free to assist in the purchase of a car dealership.Assume the federal rate of interest is 8%.What is the tax treatment of the loan？I.The arrangement has no tax consequences to Karl.II.Cars-R-Us is deemed to have paid Karl compensation of $80,000.III.Karl is deemed to have paid Cars-R-Us $80,000 of interest.IV.Cars-R-Us’ net income tax effect is zero due to this arrangement.()

A、Only statement I is correct

B、Only statements I, II, and IV are correct

C、Only statement III is correct

D、Only statements I, II, and III are correct

E、Only statements II, III, and IV are correct.