Luke and Paula file as married taxpayers. In August of this year they received a $1,200 refund of state income taxes that they paid last year. How much of the refund, if any, must Luke and Paula include in gross income under the following independent scenarios? The standard deduction last year was $24,400.

a. Last year Luke and Paula had itemized deductions of $10,200, so they chose to claim the standard deduction.

b. Last year Luke and Paula claimed itemized deductions of $38,000. Their itemized deductions included state income taxes paid of $7,500.

c. Last year Luke and Paula claimed itemized deductions of $24,900. Their itemized deductions included state income taxes paid of $7,500.