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    Taxation: Refund status from California for IOU; reportable?

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    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
    https://brainmass.com/business/accounting/taxation-refund-status-california-iou-reportable-266848

    Solution Preview

    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 ...

    Solution Summary

    In two paragraphs, the solution explains the basic concept involved in determining when the California IOUs are reportable as income.

    $2.19

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