Fundamental Payroll Certification (FPC) Practice Exam 2025 - Free Payroll Practice Questions and Study Guide

In the context of de minimis fringe benefits, cash or cash equivalents are generally not considered as de minimis fringe benefits. De minimis fringe benefits are minimal value perks provided by an employer that are excluded from taxation. The IRS defines these benefits as infrequent and of low value, which typically includes items such as occasional meals, snacks, or small gifts that have low value.

Cash and cash equivalents, such as cash bonuses or gift cards, do not fall under the de minimis category because they do not meet the IRS guidelines for low value and infrequency. The distinction is that cash can always be converted into something of value, which leads to it being taxed, unlike non-cash fringe benefits that might not meet certain value thresholds or frequency.

This understanding of cash and cash equivalents aligns with IRS regulations, making the statement true that they are never considered a de minimis fringe benefit. As such, the correct choice reflects the specific exclusion of cash from the category of de minimis benefits.