Peggy is an executive for the Tan Furniture Manufacturing Company.Peggy purchased furniture from the company for $8,000.The price Tan ordinarily charges a wholesaler is $9,500.The retail price of the furniture was $12,500,and Tan's cost was $9,000.The company also paid for Peggy's parking space in a garage near the office.The parking fee was $600 for the year.All employees are allowed to buy furniture at a discounted price comparable to that charged to Peggy.However,the company does not pay other employees' parking fees.Peggy's gross income from the above is:

Question

Quizplus · Accepted Answer

Peggy's gross income includes the parking fee of $600, which is a taxable fringe benefit, and the discount on the furniture. The discount is the difference between the wholesale price ($9,500) and the price Peggy paid ($8,000), which is $1,500. However, since all employees receive this discount, it is not considered additional income. Therefore, only the $600 parking fee is taxable, making the total gross income $600.

Peggy Is an Executive for the Tan Furniture Manufacturing Company