Tavis Works for a Company That Sponsors a Flexible Spending

Tavis works for a company that sponsors a flexible spending arrangement (FSA) as part of the cafeteria plan.Tavis's annual salary is $150,000 before any reduction for contributions to the FSA.Tavis elects to fund his FSA by reducing his salary by $2,500 to pay for medical and dental expenses not covered by insurance.Tavis pays $2,420 in qualified expenses through the FSA.The unused $80 is retained by the plan.Tavis received no distributions from this plan.Tavis's employer also paid $470 for premiums on a $240,000 face value group term life insurance policy for him.The group term life insurance rate is $0.15 per month per $1,000.Tavis is a key employee but it is not a discriminatory plan.How much gross income must Tavis report on his tax return?

A) $148,050
B) $147,932
C) $147,842
D) $147,580

Correct Answer:

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