Joanne,a Single Individual,has $2,000 in State Taxes Withheld from Her

question 128

Multiple Choice

Joanne,a single individual,has $2,000 in state taxes withheld from her salary in 2017.Her total itemized deductions are $6,400.She claims the $2,000 as an itemized deduction on her 2017 tax return.In 2018 she receives a state income tax refund of $700.Under the tax benefit rule she has to report income in 2018 of

• A)$2,000
• B)$ 700.
• C)$ 50.
• D)$ -0-.
• E)$ -0-,but Joanne must file an amended 2016 tax and reduce her itemized deductions by $700.

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Definitions:

Compound Interest

Interest calculated on the initial principal and also on the accumulated interest of previous periods, leading to exponential growth of the investment or loan.

Present Value

The current value of a future amount of money or stream of cash flows, given a specified rate of return.

Required Rate

The minimum return or yield an investment must offer to be considered viable, often referred to as the required rate of return.

Compound Interest

A way of computing interest wherein the initial amount of the loan or deposit and all the interest that has accrued in former periods are included in the calculation.