a. Kay and several of her fellow employees grew tired of driving to and from work. This year they decided to get together and buy a luxury van. Their employer is willing to help pay the cost.

b. Ten percent employee discounts are allowed on the retail price of all merchandise purchased from the employer. During the year, sales to employees totaled $18,000 ($20,000 retail price $2,000 discount) for merchandise that cost the employer $14,000. The employer reported the $18,000 as sales and the $14,000 as cost of goods sold.

Determine the (1) deductible employer amount, and (2) taxable employee amount for each of the following employer-provided benefits.