Steve is an employee of Giant Valley Auto City. The company allows all employees to receive a 35% discount on service to their personal vehicles. Steve paid $975 for work done on his truck that normally costs $1,500. How much gross income must Steve recognize because of the discount?

Question

Quizplus · Accepted Answer

Steve must recognize $225 as gross income. The discount allowed is 35% of $1,500, which equals $525. Since Steve paid $975, the discount used is exactly the allowed amount ($1,500 - $975 = $525). Therefore, there's no additional income to recognize beyond the allowed discount.

Steve Is an Employee of Giant Valley Auto City