We made an interest-free loan to an employee. The IRS requires that the interest that would have been charged to the employee (the "forgone interest" - equal to the loaned amount multiplied by the Applicable Federal Rate) be treated as taxable income to the employee.
How do I record the value of this forgone interest in QuickBooks so that the employee's W2 will reflect this amount as income to the employee? Should I use a Company Contribution payroll item?
