Michael is an employee of StayHere Hotels, Inc. in Washington, DC. On his vacation, Michael travels to San Francisco and stays at a StayHere Hotel for six nights free of charge. The regular rate for a hotel room at StayHere in San Francisco is $300 a night. His ability to stay in the hotel without charge is based on the availability of empty rooms. How much income must Michael report due to the use of the San Francisco hotel room? A) $360 B) $300 C) $1,800 D) $0

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23 June, 00:34

Michael is an employee of StayHere Hotels, Inc. in Washington, DC. On his vacation, Michael travels to San Francisco and stays at a StayHere Hotel for six nights free of charge. The regular rate for a hotel room at StayHere in San Francisco is $300 a night. His ability to stay in the hotel without charge is based on the availability of empty rooms. How much income must Michael report due to the use of the San Francisco hotel room? A) $360 B) $300 C) $1,800 D) $0

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Ricardo Gamble · Answer 1

D) $0

Explanation:

Michael staying at the StayHere Hotel in San Francisco is considered a no additional cost service. This is so because Michael can only use the hotel rooms if they are empty and no guest wants to use them. If the hotel needed the room for a new guest but decided to let Michael stay in it, then it would be a cost for the hotel so Michael should include it in his AGI.