ABC Video Sells VCRs and Television Sets

ABC Video sells VCRs and television sets.On July 1 of the current year, ABC sells a color T.V.to D, one of its sales clerks, for $400.The T.V.normally retails to customers for $600 and ABC's gross profit rate is 20%.J is an attorney for the JKL law firm.The firm pays J's annual dues to the American Bar Association.The tax consequences of these benefits are:

A) D can exclude the entire discount on the purchase of the T.V.from gross income and J can exclude the annual dues to the American Bar Association from gross income.
B) Although J is not required to include the payment of the dues in gross income, D must include $80 of the discount in gross income.
C) Although D is only required to include a portion of the purchase of the T.V.in gross income, J must include the annual dues paid to the American Bar Association in gross income.
D) D must include the entire discount on the purchase of the T.V.in gross income and J must include the annual dues to the American Bar Association in gross income.