Question
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
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 insurancesingle | $ | 5,000 |
Health insurancewith spouse | $ | 8,000 |
Health insurancewith spouse and dependents | $ | 11,000 |
Dental and vision | $ | 1,500 |
Dependent careany specified amount up to $5,000 | Variable | |
Adoption benefitsany specified amount up to $5,000 | Variable | |
Educational benefitsany specified amount (no limit) | Variable | |
Cashany 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 and the amount of deduction Fresh may claim: (Leave no answer blank. Enter zero if applicable.) a. Matt selects the single health insurance benefit and places $10,000 in his 401(k). Matt must recognize =$0 Fresh may deduct =? b. Matt selects the single health insurance benefit, is reimbursed $5,000 for MBA tuition, and takes the remainder in cash. Matt must recognize = ? Fresh may deduct = ? c. Matt selects the single health insurance benefit and is reimbursed for MBA tuition of $10,000. Matt must recognize = ? Fresh may deduct = ? d. Matt gets married and selects the health insurance with spouse benefit and takes the rest in cash to help pay for the wedding. Matt must recognize = ? Fresh may deduct = ? e. Matt elects to take all cash. Matt must recognize = 15,000 Fresh may deduct = 15,000
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