Rodrigo has $5,000 of state income taxes withheld from his salary during 2016.On his 2016 income tax return,Rodrigo properly deducts the $5,000 as state taxes paid.Upon filing his 2016 state tax return on April 15,2017,he determines that his actual State income tax for 2016 is only $4,100.He receives a $900 refund on May 25,2017 from the amounts withheld by the state.What concept(s),construct(s),or doctrine(s)dictate that the $900 is included in Rodrigo's 2017 income?
I.Annual Accounting Period Concept.
II.Tax Benefit Rule.

Question

Rodrigo has $5,000 of state income taxes withheld from his salary during 2016.On his 2016 income tax return,Rodrigo properly deducts the $5,000 as state taxes paid.Upon filing his 2016 state tax return on April 15,2017,he determines that his actual State income tax for 2016 is only $4,100.He receives a $900 refund on May 25,2017 from the amounts withheld by the state.What concept(s),construct(s),or doctrine(s)dictate that the $900 is included in Rodrigo's 2017 income?
I.Annual Accounting Period Concept.
II.Tax Benefit Rule.
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Quizplus · Accepted Answer

The Tax Benefit Rule requires that the $900 refund be included in Rodrigo's 2017 income because he received a tax benefit from the deduction of the $5,000 state income taxes on his 2016 federal income tax return. The Annual Accounting Period Concept requires that income be reported in the year in which it is earned, and deductions be taken in the year in which they are incurred.

Rodrigo Has $5,000 of State Income Taxes Withheld from His