According to our reading, "if a taxpayer receives a refund of state income taxes deducted in a prior year, the taxpayer must include the refund as income in the year of the refund to the extent the taxpayer received a tax benefit from the prior deduction."
What about California's situation where taxpayers are getting IOU's from the state rather than actual cash from the state?© BrainMass Inc. brainmass.com June 3, 2020, 11:10 pm ad1c9bdddf
Very interesting question and not one that tax people have had to deal with in the past. The truth is that individual taxpayers report on a cash basis and therefore the unreceived refund is not a reportable ...
In two paragraphs, the solution explains the basic concept involved in determining when the California IOUs are reportable as income.