Jarvie loves to bike. In fact, he has always turned down better-paying jobs to work in bicycle shops where he gets an employee discount. At Jarvies current shop, Bad Dog Cycles, each employee is allowed to purchase four bicycles a year at a discount. Bad Dog has an average gross profit percentage on bicycles of 25 percent. During the current year, Jarvie bought the following bikes:

Description	Retail Price	Cost	Employee Price
Specialized road bike	$	7,900	$	5,370	$	5,530
Rocky Mountain mountain bike		8,600		7,300		6,880
Trek road bike		4,300		2,950		3,010
Yeti mountain bike		5,500		4,030		4,400

a. What amount is Jarvie required to include in taxable income from these purchases? b. What amount of deductions is Bad Dog allowed to claim from these transactions?