Karl works at Moe's grocery. This year Karl was paid $43,000 in salary but he was allowed to purchase his groceries at 10% below Moe's cost. This year Karl spent $3,600 to purchase groceries costing Moe $4,000 and worth $6,000. What amount must Karl include in his gross income?

Question

Quizplus · Accepted Answer

Employees must recognize imputed income to the extent they are allowed to purchase goods from their employer at a price below the employer's cost. [($43,000 + ($4,000 × 0.10)] = $43,400.

Karl Works at Moe's Grocery