Tonya Is a Cash Basis Taxpayer

question 80

Multiple Choice

Tonya is a cash basis taxpayer. In 2018, she paid state income taxes of $8,000. In early 2019, she filed her 2018 state income tax return and received a $900 refund.

• A) If Tonya itemized her deductions in 2018 on her Federal income tax return, she should amend her 2018 return and reduce her itemized deductions by $900.
• B) If Tonya itemized her deductions in 2018 on her Federal income tax return and her itemized deductions exceeded the standard deduction by at least $900, the refund will not affect her 2019 tax return.
• C) If Tonya itemized her deductions in 2018 on her Federal income tax return, she must amend her 2018 Federal income tax return and use the standard deduction.
• D) If Tonya itemized her deductions in 2018 on her Federal income tax return and her itemized deductions exceeded the standard deduction by more than $900, she must recognize $900 income in 2019 under the tax benefit rule.
• E) None of these.

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Definitions:

Vacation Days

Days allocated to an employee on which they are allowed to be absent from work, typically for rest or leisure.

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