On K's 2015 Oregon Income tax return, he owed $2,000 in taxes, including $2500 tax due and $500 kicker refund. He paid the $2,000 in full in April 2016. K always itemizes deductions on his federal return. Must K include the $500 state kicker refund as income on his 2016 tax return? How much of the $2500 can K deduct on his 2016 tax return? Will your conclusion change if K always take the standard deduction?

Please use primary source, and format the paper as the uploaded file. More tip will be provided for satisfied answer.

1. Facts: Tim Loker has no family relationship to the Bryants family. Tim Loker is five years old, which is under 18. Tim Loker became a member of the Bryants household since August 12 of this year, which means by the end of this year, Tim will have been in the household for less than 5 months. Bryants family provided 100% of Tim's financial support, and intend to raise Tim as their kid. 2. Issues: (Example from other cases) Will Sara realize a loss on the sale of her land to CCM Inc.? Can Sara recognize her realized loss? What is the character of any recognized loss? Given the character of the loss, to what extent can Sara deduct the loss in the computation of taxable income for the year of sale? 3. Rules of law with citations to PRIMARY sources: Sec. 267. Losses, expenses, and interest with respect to transactions between related taxpayers a. In general 1. Deduction for losses disallowed No deduction shall be allowed in respect of any loss from the sale or exchange of property, directly or indirectly, between persons specified in any of the paragraphs of subsection (b). b. Relationships The persons referred to in subsection (a) are: 2. An individual and a corporation more than 50 percent in value of the outstanding stock of which is owned, directly or indirectly, by or for such individual; c. Constructive ownership of stock For purposes of determining, in applying subsection (b), the ownership of stock 3. An individual shall be considered as owning the stock owned, directly or indirectly, by or for his family; 4. The family of an individual shall include only his brothers and sisters (whether by the whole or half blood), spouse, ancestors, and lineal descendants; and 5. ... stock constructively owned by an individual by reason of the application of paragraph (2) or (3) shall not be treated as owned by him for the purpose of again applying either of such paragraphs in order to make another the constructive owner of such stock. According to Section 267(a)(1), Sara cannot recognize her realized loss if she and CCM Inc. are related parties. According to Section 267(b)(2), Sara and CCM Inc. are related parties if Sara directly or indirectly owns more than 50 percent in value of CCM's outstanding stock. You know that Sara does not own any CCM stock directly, but you are uncertain as to whether she owns any stock indirectly. Section 267(c)(2) provides that Sara is considered to own any CCM stock owned by her \"family.\" When you refer to the facts you established during your first meeting with Sara, you discover that you do not know how many shares of CCM stock are... 4. Conclusion and Recommendations 5. Positions you would consider taking/ areas you would like to analyze in more depth if you had more time 1. Facts: Tim Loker has no family relationship to the Bryants family. Tim Loker is five years old, which is under 18. Tim Loker became a member of the Bryants household since August 12 of this year, which means by the end of this year, Tim will have been in the household for less than 5 months. Bryants family provided 100% of Tim's financial support, and intend to raise Tim as their kid. 2. Issues: Can Tim Loker be defined as a dependent of Bryants family? Is the financial support to Tim be able to exempt from Bryants family's tax return? 3. Rules of Law In this case, Tim and the Bryants family has no family relationship. Based on the Section 152(d) (2)(H), Tim does not qualify to be treated as the Bryants family relative not unless he shares the same principal place of abode both as the taxpayer as well as a member of the taxpayer's household\" for the current taxable year (Legal Information Institute 1992). In addition, Reg Section 1. 152-1 (b) indicates that Tim Loker should have been a member of the Bryants family for the entire year apart from a consideration of a temporary absence because of special circumstance. 4. Conclusion and Recommendations The provided regulation concludes that the lack of more than 6 months is not regarded as temporary. In this case, Tim has been with the Bryant family for less than 5 months thus he misses an exact of 7 months to complete a full year with the family. In conclusion, Tim cannot be considered as a relative to the Bryants household and thus Bryants family is not objective to claim Tim as their dependent on their current year's tax returns. Bryants family must wait for the following year to include the financial support in their tax return. 5. Positions you would consider taking/ areas you would like to analyze in more depth if you had more time In this case, Tim Loker can be placed under adopted child with special needs category in under Section 23(d)(3). The term \"child with special needs\" means any child if such State has determined that there exists with respect to the child a specific factor or condition because of which it is reasonable to conclude that such child cannot be placed with adoptive parents without providing adoption assistance, and such child is a citizen or resident of the United States (as defined in section 217(h)(3)). According to Section 23(a)(3), The Bryants family shall be treated as having paid during such year qualified adoption expenses with respect to such adoption in an amount equal to the excess (if any) of $10,000 over the aggregate qualified adoption expenses actually paid or incurred by the taxpayer with respect to such adoption during such taxable year and all prior taxable years