Matt works for Fresh Corporation. Fresh offers a cafeteria plan that allows each employee to receive...
Matt works for Fresh Corporation. Fresh offers a cafeteria plan that allows each employee to receive $15,000 worth of benefits each year. The menu of benefits is as follows:
| Benefit | Cost | |
| Health insurance—single | $ | 5,000 |
| Health insurance—with spouse | $ | 8,000 |
| Health insurance—with spouse and dependents | $ | 11,000 |
| Dental and vision | $ | 1,500 |
| Dependent care—any specified amount up to $5,000 | Variable | |
| Adoption benefits—any specified amount up to $5,000 | Variable | |
| Educational benefits—any specified amount (no limit) | Variable | |
| Cash—any specified amount up to $15,000 plan benefit | Variable | |
| 401(k)—any specified amount up to $10,000 | Variable | |
For each of the following independent circumstances, determine the
amount of income Matt must recognize (ignore FICA taxes):
(Leave no answer blank. Enter zero if
applicable.)
a. Matt selects the single health insurance and places $10,000 in his 401(k).
| Recognized income |
|---|
b. Matt selects the single health insurance, is reimbursed $5,000 for MBA tuition, and takes the remainder in cash.
| Recognized income |
|---|
c. Matt selects the single health insurance and is reimbursed for MBA tuition of $10,000.
| Recognized income |
|---|
d. Matt gets married and selects the health insurance with his spouse and takes the rest in cash to help pay for the wedding.
| Recognized income |
|---|
e. Matt elects to take all cash.
| Recognized income |
|---|
Homework Answers
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