Brad,who uses the cash method of accounting,lives in a state that imposes an income tax (including withholding from wages).On April 14,2010,he files his state return for 2009,paying an additional $600 in state income taxes.During 2010,his withholdings for state income tax purposes amount to $3,550.On April 13,2011,he files his state return for 2010 claiming a refund of $800.Brad receives the refund on August 3,2011.If he itemizes deductions,how much may Brad claim as a deduction for state income taxes on his Federal income tax return for calendar year 2010 (filed in April 2011)?
A)$3,350.
B)$3,550.
C)$4,150.
D)$5,150.
E)None of the above.

Question

Quizplus · Accepted Answer

Brad can deduct the total state income taxes paid in 2010, which includes the $600 paid on April 14, 2010, and the $3,550 withheld during 2010, totaling $4,150. The refund received in 2011 does not affect the 2010 deduction.

Brad,who Uses the Cash Method of Accounting,lives in a State