Final answer:
The statement likely refers to IRS rules on de minimis fringe benefits, which can make negligible value gifts to employees, such as turkeys and cakes for Christmas, not subject to tax or cutback adjustments. This is generally true as long as the value of the gifts doesn't exceed certain thresholds.
Step-by-step explanation:
The assertion that the gifts provided by Fern Corporation to its employees, specifically a turkey and a cake at Christmas, are not subject to the cutback adjustment is a statement that pertains to employee compensation and benefits which falls under tax law and business regulation. Whether such gifts are subject to cutback adjustments is determined by the current tax regulations and company policies.
If by 'cutback adjustment' you are referring to the IRS rules on de minimis fringe benefits which are often given to employees and can be excluded from income (such as holiday gifts of low value), then this statement is typically true. De minimis fringe benefits are benefits of minimal value that are infrequent and make accounting for them unreasonable or administratively impracticable. The IRS often does not require these small gifts to be reported as income, thereby exempting them from tax. However, if the gifts exceed a certain value, they might be taxable. It's important to consult the latest IRS guidelines or a tax professional to confirm this.