a.

Ridge is the manager of a motel. As a condition of his employment, Ridge is required to live in a room on the premises so that he would be there in case of emergencies. Ridge considered this a fringe benefit, since he would otherwise be required to pay $600 per month rent. The room that Ridge occupied normally rented for $60 per night, or $1,500 per month. On the average, 90% of the motel rooms were occupied. As a result of this rent-free use of a room, Ridge is required to include in gross income.

		$0
		$600 per month
		$1,500 per month
		$1,350 ($1,500 x .90 = $1,350)

b.

Hazel, a solvent individual, owed $25,000 to her employer. The employer forgave the employee for her indebtedness. Hazel also borrowed $50,000 from her father to buy a house in 2015. In 2021 her father informed her that he forgives the loan completely. Hazel's gross income from the above is:

		$0
		$75,000
		$25,000
		$50,000