Choice "C" is correct. Independence is impaired by a member, a member's spouse or dependents, or a close family member who holds a key position in an audit client. According to the Code, a close relative is defined as a parent, sibling, or nondependent child. Since a brother-in-law and family of the brother-in-law are not considered to be close relatives, independence would not be impaired.
Choice "a" is incorrect. A CPA auditor cannot work for the client in a key position during the audit year.
Choice "b" is incorrect. If the results of the valuation and appraisal services are material to the client's financial statements, the auditor's independence is impaired.
Choice "d" is incorrect. Fully-collateralized automobile loans made within the normal course of business by a financial institution are specifically permitted and do not impair independence. Since this loan is not collateralized, independence is impaired.