Robbie, a cash$-$basis single taxpayer, reported $$50,000$ of adjusted gross income last year and claimed itemized deductions

of $$15,750,$ consisting of $$10,000$ of state income taxes and $$5,750$ of investment interest, paid last year. Robbie's itemized

deduction amount, which exceeded the standard deduction available to sing ${?}^e$ taxpayers for last year by $$1,150,$ was fully

deductible, and it was not subject to any limitations or phase$-$outs. In the current year, Robbie received a $$1,500$ state tax

refund relating to the prior year. What is the proper treatment of the state tax refund?

Include $$1,150$ in income in the current year.

Amend the prior year's return and reduce the claimed itemized deductions for that year.

Include $$1,500$ in income in the current year.

Include none of the refund in income in the current year.