Brad, Who Uses the Cash Method of Accounting, Lives in a State

question 15

Multiple Choice

Brad, who uses the cash method of accounting, lives in a state that imposes an income tax (including withholding from wages) . On April 14, 2018, he files his state return for 2017, paying an additional $600 in state income taxes. During 2018, his withholdings for state income tax purposes amount to $3,550. On April 13, 2019, he files his state return for 2018 claiming a refund of $800. Brad receives the refund on June 3, 2019. 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 2018 (filed in April 2019) ?

• A) $3,350
• B) $3,550
• C) $4,150
• D) $5,150
• E) None of the above

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Definitions:

Monopoly

A firm that is the sole seller of a product without any close substitutes.

Game Theory

The study of how people behave in strategic situations

Competitive Markets

Markets in which there are many buyers and sellers so that each has a negligible impact on the market price of goods and services.

Monopoly Markets

Markets in which a single seller dominates, with no viable competition, often leading to higher prices for consumers.