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Katena32 [7]
3 years ago
7

Norbert works in a beauty salon. he receives a 50% employee discount for salon services. in 2016, he used his discount to buy $1

,000 of services with a fair market value of $2,000. as a result of these bargain purchases, how much should norbert include in 2016 gross income?
a. $0
b. $2,000
c. $1,000
d. $600
Business
1 answer:
Crank3 years ago
4 0
The answer is D. $600. In general, the employee discount didn't result in taxable income to the recipient. The amount that may be excluded in relation to services purchased by employees, however, is limited to 20% of the amount normally charged to non-employee customers. As a result, Norbert would be able to exclude an employee discount up to 20% x $2,000 or $400 with the remaining $600 included in gross income.
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