USA Corporation hired Jaxon to install a computer system for the company and paid him $16,000 for the work USA soon realized that there were problems with the system and asked Jaxon to refund the payment. At the end o the year the dspute had not been resolved Jaxon is n the 28% tax racket in the year he dd the o nal work Dunng the next year, when he is the 15% tax bracket. Jaxon refunds the $16,000 to USA. Read the Requirement a. Is the original payment taxable to Jaxon when he receives i? Thus. | the payment | taxable because Requirement b. What options are available to Jaxon when he repays the $16,000? Jaxon can simply in the year t is repakd, which will his tax by Alternately, he can his current year tax (the year of repayment) by the additional $ tax paid in the previous year. In this situation the altermative is preferred $1,000? O A. The payment is less than $5,000, Jaxon has only the option of reducing his current year tax by $280, using the prior year tax rale. OB. The payment is more than $1,000. Jaxon can deduct the $1,000 which will reduce his tax by $150 or he can reduce his current year tax by $280, using the prior year tax rate O C. The payment is less than $3,000, Jaxon has only the option of deducting the repayment. D. The payment is less than $5,000, Jaxon has only the option of deducting the repayment