Question

Kevin is the financial manager of levingston bmw. the shop allows employees to purchase up to two vehicles at a discount. levingston's average gross profit percentage is 15%. this year kevin purchased a 530 model and a new m3. model fmv dealer cost employee price 530 $63,000 $50,000 $54,000 m3 $70,000 $60,000 $57,000 what amount must kevin include in income?
a. $0
b. $2,500
c. $2,950
d. $22,000

Answer 1

Kevin must take in $2,500 into his gross income. This is for the reason that the $13,000 ($70,000 -$57,000) discount got on the M3 is bigger than the qualified employee discount of$10,500 (sales price of $70,000 multiplied by the average gross profit percentage of 15%). There is no gross income from the acquisition of the 530 because the $9,000 ($63,000 - $54,000) reduction is less than the qualified employee discount of $9,450 ($63,000 multiplied by the average gross profit percentage of 15%).