An electronics store sold a home theater system to an employee for $300,even though the retail price was $500.The gross profit percentage is 40%.Such discounts are available to all employees.How much income should be recognized by the employee from these transactions?

Question

Quizplus · Accepted Answer

No income should be recognized by the employee as the discount was offered to all employees and is not considered a taxable benefit. Therefore, the employee paid $300 (out of pocket) for a home theater system that was originally priced at $500, which is a discount of $200 or 40%.

An Electronics Store Sold a Home Theater System to an Employee