This Year Ed Celebrated His 25th Year as an Employee

question 12

Multiple Choice

This year Ed celebrated his 25th year as an employee of Designer Jeans Company. In recognition of his long and loyal service, the company awarded Ed a gold watch worth$250 and a $2,000 cash bonus. What amount must Ed include in his gross income?

• A) $2,250.
• B) $250.
• C) $2,000.
• D) Zero if Ed offers to contribute his watch and bonus to a qualified charity.
• E) Zero - all employee awards are excluded from gross income.

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Definitions:

Market Price

The current price at which an asset or service can be bought or sold in a public marketplace.

Incremental Value

The additional value created by undertaking a specific action, beyond the existing value without taking that action.

Market Value

The current price at which an asset or service can be bought or sold in a particular market.