please explain question 27 (c), and 'similar question of courtney 10000 cap limitation

i dont understand it at all, even though i read the answer.

Alt ite CHAPTER 5 stand Gross Income c) Last year Louis claimed itemized deductions of $13,440. Louis's itemized deductions reduction for included state income taxes paid of $2,750 and no other state or local taxes. itemize 47. L. A. and Paula file as married taxpayers. In August of this year, they received a $5,200 refund of state income taxes that they paid last year. How much of the refund, if any, must L. A. and Paula include in gross income under the following independent scenarios? Assume the standard deduction last year was $24,000. a) Last year L. A. and Paula had itemized deductions of $19,200, and they chose to claim the standard deduction. Halo hereh 60) b) Last year L. A. and Paula claimed itemized deductions of $30,300. Their itemized deductions included state income taxes paid of $7,500 and no other state or local taxes. C) 70 300 - 74 12 - 63 00 0 Last year L. A. and Paula claimed itemized deductions of $26,500. Their itemized deductions included state income taxes paid of $10,500, which were limited to $10,000 due to the cap on state and local tax deductions. 8. Clyde is a cash-method taxpayer who reports on a calendar-year basis. This year Paylate Corporation has decided to pay Clyde a year-end bonus of $1,000. Deter- mine the amount Clyde should include in his gross income this year under the following circumstances: a) Paylate Corporation wrote the check and put it in his office mail slot on Decem- ber 30 of this year, but Clyde did not bother to stop by the office to pick it up until after year-end. b) Paylate Corporation mistakenly wrote the check for $100. Clyde received the remaining $900 after year-end. c) Paylate Corporation mailed the check to Clyde before the end of the year (and it was delivered before year-end). Although Clyde expected the bonus payment, he decided not to collect his mail until after year-end. d) Clyde picked up the check in December, but the check could not be cashed im- mediately because it was postdated January 10.ndard What if. Let's conside application of the tax benefit rule. deduct.on Scenario A: In 2019 Courtney's itemized deductions, inc Scenario B: In 2019 Courtney's itemized deductions, including $3,500 in How much of the $420 refund would Courtney include in her (2020 gross income in Scenarios A and Answer Scenario A: $0. As computed below, Courtney received $0 tax benefit from the $420 overpayment in 2019, so she need not include any of the refund in her 2020 gross income. Answer Scenario B: $200. As computed below. Courtney received a $200 tax benefit (reduction taxable income) from the $420 state tax overpayment in 2019, so she must include $200 of the refund her 2020 gross income. Scenario B 100:80 Scenario A Explanation Deduction Amount Amount (1) Itemized deductions $15,500 $18,550 (2) 2019 standard deduction 18,3505 18,350 Head of household filing status (3) Reduction in taxable income 18.350 18,550 Greater of (1) and (2) (4) Itemized deductions adjusted 15,080 18,130 (1) - $420 for the $420 refund 5) Reduction in taxable income adjusted for the $420 refund 18,350 18,350 Greater of (2) and (4) Tax benefit due to prior deduction ~# $420 refund $ $ 200 (3) - (5) What if: In 2019 Courtney's itemized deductions were $18,550 and included $10,000 of state taxes ($10,500 total state taxes, limited by tax law to $10,000). We discuss the $10,000 state and local tax limitation in the Individual Deductions chapter)(How much of the $420 refund would Courtney include in her 2020 gross income? Answer: $0. Courtney received $0 tax benefit from the $420 tax overpayment in 2019. Her itemized deduction for state taxes adjusted for the $420 refund would still be $10,000 ($10,500 - $420 = $10,080, limited to $10,000) and her total itemized deductions would still be $18,550. So, she need _not include any of the refund in her 2020 gross income." 2 80 When Do Taxpayers Recognize Income? dividual taxpayers generally file tax returns reporting their taxable ar period, whereas corporations often use a fiscal year-end. In er's method of accounting generally determines the year in whic. a calendar ognized and included in gross income. the tax Rev. Rul. 2019-11.iviaual would have elected the standard deduction, and the refund would have caused taxable income to increase by only $100 (because of the difference between claiming the standard deduction and using the total itemized deductions that would have been claimed in the absence of any re- fund) If the refund occurs the year after the deduction is claimed, then only $100 of the $150 refund would be included in gross income under the tax benefit rule. The $100 is added to taxable income in the year of the refund because this is the increment in taxable income that would have resulted if the refund had been issued in the year the itemized deduction was claimed. In 2019 Courtney) paid $3,500 in Ohio state income taxes, and she included this payment with her other itemized deductions when she filed her federal income tax return in March of 2020. Courtney filed her 2019 federal return as a head of household and claimed $20,450 of itemized deductions (including $3,500 state income taxes, $2,500 of real estate taxes, $8,000 of mortgage interest ex- pense, and $6,450 of charitable contributions). She also filed an Ohio state income tax return in March of 2020 and discovered she only owed $3,080 in Ohio income tax for 2019. Hence, Courtney re- ceived a $420 refund of her Ohio income tax in June of 2020. How much of the $420 refund, if any, is Courtney required to include in her gross income for 2020 given that the standard deduction for head of household filing status in 2019 was $18,350?) (continued on page 5-6) 38111