3. In 20x1, Water Corporation hired Dave to install a computer system for the company and paid him $5,000 for the work. Water soon realized there were problems asked Dave to refund the payment. At the end of the year the dispute had not been resolved. Dave is in the 32% tax bracket for 20x1. During 20x2, when Dave is in the 24% tax bracket, he issues a repayment to water. Which of the following statements is true with regard to these transactions? a. If the repayment is for $5,000, Dave cannot deduct the $5,000 in 20x2. the repayment is for $5,000, Dave can only offset his 20x2 tax liability with a credit of $1,200. c. If the repayment is for $2,000, Dave can offset his 20x2 tax liability with a credit of $640. d. If the repayment is for $2,000, Dave will lose a total of $480 because of the income and repayment. e. None of the answers provided is correct