LO.1 Fred, a cash basis taxpayer, received a $75,000 bonus from his employer in 2012.

The bonus was based on the company’s profits for the year 2011. In 2013, the company discovered that its 2011 profits were incorrectly computed. As a result, Fred was required to repay his employer $25,000 of the bonus. Fred’s marginal tax rate was 35% in 2012 and 15% in 2013. Sue, a cash basis taxpayer, earned a $75,000 bonus in 2012 that her employer failed to pay until 2013. Sue was in the 15% marginal tax bracket in 2012 and the 35% bracket in 2013. What special tax relief is available to Fred that is not available to Sue?