1. Emma is a waitress at Chuckles Restaurant. The parent company of Chuckles, Good Times, Inc., also owns the Big Top chain of hotels. Emma doesnt ever work at Big Top, but when she travels on vacation she stays at Big Top hotels for free. This year she stayed for free a total of ten nights (fair market value of $1,000). What are the tax consequences for Emma?

a. Emma must include the full amount of the hotel stays in gross income, since she is not an employee of Big Top.

b. Emma can exclude the full amount of the hotel stays from gross income, since Big Top is owned by the parent company of Chuckles.

c. Emma can exclude the full amount of the hotel stays from gross income, but only if the rooms are not reserved in advance.

d. Emma must include the difference between the fair market value price and the cost of the hotel rooms in gross income.