1. Martha Meyers, an employee of Ace, Inc., purchased an asset with a fair market value of $8,000 from her employer for $5,000. What amount should Martha report as income and what should her basis in the asset be?

   		a. income of $0 and basis of $5,000
   		b. income of $3,000 and basis of $5,000
   		c. income of $0 and basis of $8,000
   		d. income of $3,000 and basis of $8,000