Question - Sarah is an executive at Robin Yogurt. Because she loves the yogurt so much, in the current year she decides to buy a yogurt machine from Robin for $9,300. The machine cost the company $9,000 (the wholesale price), and it has a fair market value of $12,500 (price at which sold at retail). Only executives are permitted to buy yogurt machines at a discount. What is Sarah's adjusted basis for the yogurt machine and how much must she include in her gross income?
a. $9,300 basis, $3,500 gross income.
b. $9,300 basis, $3,200 gross income.
c. $12,500 basis, $3,500 gross income.
d. $12,500 basis, $3,200 gross income.
e. None of the above.