Morris Is a Single Individual Who Has Total Itemized Deductions

question 158

Multiple Choice

Morris is a single individual who has total itemized deductions in 2018 of $12,500. His itemized deductions include $2,000 for state income taxes. After filing his 2018 state income tax return he receives a refund of $275.

• A)Morris must include $275 as income on his 2018 federal income tax return.
• B)Morris must amend his 2018 federal tax return to reflect state income taxes of $1,725 ($2,000 - $275).
• C)If Morris itemizes his tax return in 2019 he must reduce his state tax deduction by $275.
• D)Morris must include $200 as income on his 2019 federal income tax return.
• E)Morris does not have to report any of the state income tax refund on his 2019 tax return.

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Definitions:

Total Revenue

The total income received by a firm from its sales of goods or services, calculated as the unit price times the quantity sold.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers.

Inelastic

A situation in which the demand or supply for a good or service is relatively unresponsive to changes in price.

Price Elasticity

The measurement of demand's elasticity to price changes for a particular good.