Question

Randy is the manager of a motel. As a condition of his employment, Randy is required to live in a room on the premises so that he would be there in case of emergencies. Randy considered this a fringe benefit since he would otherwise be required to pay $800 per month rent. The room that Randy occupied normally rented for $70 per night, or $2,100 per month. On the average, 90% of the motel rooms were occupied. As a result of this rent-free use of a room, Randy is required to include how much gross income?

Answer 1

a. $0

Step-by-step explanation:

a. $0

b. $800 per month.

c. $2,100 per month.

d. $1,890 ($2,100 x .90)

A (0)

It should be noted that gross income is the addition of all earnings, this could be the wages,profits, and so on that is available before the removal of taxes.

Therefore, From the question above, Randy, who is the manager that enjoy rent-free use of a room, will be required to include $0 as the gross income, because no deduction or taxes has been removed from the free rent he was enjoying, nothing was paid.