On December 31, 2018, Deb's employer gave her a Tag Heuer Limited Edition Tom Brady watch because Deb met her sales quota for the year.
Deb’s employer originally purchased the watch in 2017 for $3,750.At the time Deb received the watch from her employer (Dec. 31, 2018), the price had decreased to $3,000 because Tag Heuer was having a difficult time selling through their inventory of Tag Heuer Limited Edition Tom Brady watches.
In January 2019, Tom Brady again helped lead the Patriots to the Super Bowl, and demand for the Tag Heuer Limited Edition Tom Brady watch soared. The watch was sold out at all retail locations. The only place to buy the watch was on eBay, where Tag Heuer Limited Edition Tom Brady watches were selling for $5,000.
What is the amount of Deb's gross income, if any, from the receipt of the watch?
Purchase price of watch borne by Deb's employer (Year 2017): $ 3,750
Price of watch at the time when Deb received it (Dec. 31, 2018): $ 3,000
Selling price of the watch in January, 2019: $ 5,000
Deb's gross income from the receipt of watch could be considered as the market value of the watch at the time when the watch was received i.e. $3,000. Though Deb did not receive the same in cash it can be considered as the valuation of Deb's contribution to achieving sales targets made by Deb's employer. This is the cost that would be incurred if Deb had to buy the watch from market at the time when he received it from his employer. However, from Deb's employer's point of view cost of the reward to Deb was $ 3,750 i.e. the price at which he had purchased it in Year 2017.
Considering the market price of the watch in January, 2019 i.e. $ 5,000; it could be said that Deb made a notional gain of $ 2,000.
On December 31, 2018, Deb's employer gave her a Tag Heuer Limited Edition Tom Brady watch...
On December 20, 2019, Deb's employer gave her a Tag Heuer Limited Edition Tom Brady watch because Deb met her sales quota for the year. Deb’s employer originally purchased the watch at the beginning of 2019 for $3,000. At the time Deb received the watch from her employer (Dec. 20, 2019), the price of similar watches had increased to $3,750 because everyone thought that Tom Brady was going to lead the Patriots to another Super Bowl victory. By Dec. 31,...
n December 20, 2019, Deb's employer gave her a Tag Heuer Limited Edition Tom Brady watch because Deb met her sales quota for the year. Deb’s employer originally purchased the watch at the beginning of 2019 for $3,000. At the time Deb received the watch from her employer (Dec. 20, 2019), the price of similar watches had increased to $3,750 because everyone thought that Tom Brady was going to lead the Patriots to another Super Bowl victory. By Dec. 31,...
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