Rodrigo has $5,000 of state income taxes withheld from his salary during 2015.On his 2015 income tax return,Rodrigo properly deducts the $5,000 as state taxes paid.Upon filing his 2015 state tax return on April 15,2016,he determines that his actual State income tax for 2015 is only $4,100.He receives a $900 refund on May 25,2016 from the amounts withheld by the state.What concept(s),construct(s),or doctrine(s)dictate that the $900 is included in Rodrigo's 2016 income?
I.Annual Accounting Period Concept.
II.Tax Benefit Rule.

Question

Rodrigo has $5,000 of state income taxes withheld from his salary during 2015.On his 2015 income tax return,Rodrigo properly deducts the $5,000 as state taxes paid.Upon filing his 2015 state tax return on April 15,2016,he determines that his actual State income tax for 2015 is only $4,100.He receives a $900 refund on May 25,2016 from the amounts withheld by the state.What concept(s),construct(s),or doctrine(s)dictate that the $900 is included in Rodrigo's 2016 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 2016 income because he received a tax benefit from the deduction in 2015. The Annual Accounting Period Concept requires that income be reported in the year it is earned, and deductions be taken in the year they are incurred.

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