Chico is a corporation operating in several states on the accrual basis. Chico received a state income tax refund this year (Year 4) based on the following sequence of events. In which tax year does Chico recognize the refund as gross income? Year 1: Generated the operating loss. Year 2: Filed the loss carryback form with the state. Year 3: Received notice that the refund was approved. Year 4: Received the refund check.