Morris Is a Single Individual Who Has Total Itemized Deductions

question 68

Multiple Choice

Morris is a single individual who has total itemized deductions in 2014 of $6,150. His itemized deductions include $2,000 for state income taxes. After filing his 2014 state income tax return he receives a refund of $275.

• A) Morris must include $275 as income on his 2015 federal income tax return.
• B) Morris must amend his 2014 federal tax return to reflect state income taxes of $1,725 $2,000 - $275).
• C) If Morris itemizes his tax return in 2015 he must reduce his state tax deduction by $275.
• D) Morris must include $200 as income on his 2015 federal income tax return.
• E) Morris does not have to report any of the state income tax refund on his 2015 tax return.

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Definitions:

Foreign Currency Transactions

Foreign currency transactions involve the exchange of one country's currency for another, affecting companies that engage in international trade or investment.

Monetary Assets

Assets that hold a fixed monetary value, including cash and assets that can be easily converted into cash.

Current Rate

The present interest rate, exchange rate, or other financially relevant rate that is applicable to a financial instrument or transaction.

Goodwill Impairment

The financial recognition that the value of the goodwill acquired in a business combination has decreased, indicating that the carrying value of the goodwill is no longer supported by the future economic benefits it was expected to generate.