Federal Tax Research 10th Edition by Steven Gill, Gerald Whittenburg, Roby Sawyers, Debra Sanders, William Raabe

Exercise 24

Chico is a corporation operating in several states on the accrual basis. Chico received a state income tax refund this year (Year 4) based on the following sequence of events. In which tax year does Chico recognize the refund as gross income
Year 1: Generated the operating loss.
Year 2: Filed the loss carryback form with the state.
Year 3: Received notice that the refund was approved.
Year 4: Received the refund check.