An employee of a nail salon is allowed a 20% discount on any nail services she purchases from the salon. In 2018, she purchased 24 manicures and 16 pedicures. The total cost would have been $1,400. The employee paid only $1,120 because she was an employee for all of 2018. The federal income tax treatment of the $280 discount is:

a. include gross income

b. deduct $280 from AGI if the standard deduction is not elected

c. exclude $280 from gross income

d. deduct $1,120 for AGI

e. deduct $280 for AGI

Answer rating: 100% (QA)

Per Section 132 a 2 of the IRS qualified employees are eligible for a discount of 20 of the value of ... View the full answer