Required information [The following information applies to the questions displayed below.] Nikki works for the Shine...
Required information
[The following information applies to the questions
displayed below.]
Nikki works for the Shine Company, a retailer of upscale jewelry.
How much taxable income does Nikki recognize under the following
scenarios? (Round your answers to 2 decimal places. Leave
no answer blank. Enter zero if applicable.)
b. Nikki receives a 29 percent discount on jewelry restoration services offered by Shine Company. This year, Nikki had Shine Company repair a set of antique earrings (normal repair cost $605; discounted price $429.55).
What is the taxable income?
Homework Answers
Nikki being an employee receives discounted price for the services from her employer hence this is benefit in kind and it would be taxable unless they fall within exemption (like meal) or de minimis.
| Market Rate | 605.00 |
| Discount @ 29% | 175.45 |
| Price Recovered | 429.55 |
Nikki is receiving discount of $175.45 which is benefit in kind hence her taxable income would be $175.45
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