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 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: Note: Leave no answer blank. Enter zero if applicable. Required: Matt selects the single health insurance benefit and places $10,000 in his 401(k). Matt selects the single health insurance benefit, is reimbursed $5,000 for dependent care, and takes the remainder in cash. Matt selects the single health insurance benefit and is reimbursed for $10,000 of dependent care. Matt gets married and selects the health insurance with spouse benefit and takes the rest in cash to help pay for the wedding. Matt elects to take all cash.
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