ABC Co. offers a cafeteria plan. All full-time employees are allowed to select any combination of the benefits below, but the total received by the employee cannot exceed $8,000 a year.

1. Group medical and hospitalization insurance for the employee, $3,600 a year.

2. Group medical and hospitalization insurance for the employees spouse and children, $1,200 a year.

3. Child-care payments, actual cost but not more than $4,800 a year.

4. Cash required to bring the total of benefits and cash to $8,000.

Which of the following statements is true? a. Paul, a full-time employee, elects to receive $8,000 cash because his wifes employer provided these same insurance benefits for him. Paul is not required to include the $8,000 in gross income.

b. Sue, a full-time employee, elects to receive choices I, II and $3,200 for III. Sue is required to include $3,200 in gross income.

c. Sam, a full-time employee, selects choices II and III and $2,000 cash. His gross income must include the $2,000.

d. All of these.

e. None of these.