Fact Pattern Ted works for Musk Motors, an automobile dealership . All employees can buy a car at cost plus 2%. Furthermore, Musk Motors charges employees a $800 dealer preparation fee rather than the $1, 000 that must be paid by customers. Ted purchased a Model 3 for $40,800 (\$40,000 cost plus 2\%). Customers are required to pay $45,000 for a Model 3 . Question How much must Ted report as gross income as a result of his purchase of the Model 3 from his employer