Exercise 10-4 (Algorithmic) (LO. 2)

Pierre, a cash basis, unmarried taxpayer, had $3,860 of state income tax withheld during 2018. Also in 2018, Pierre paid $965 that was due when he filed his 2017 state income tax return and made estimated payments of $2,702 towards his 2018 state income tax liability. When Pierre files his 2018 Federal income tax return in April 2019, he elects to itemize deductions, which amount to $13,850, including the state income tax payments and withholdings, all of which reduce his taxable income. As a result of overpaying his 2018 state income tax, Pierre receives a refund of $1,544 in 2019. The standard deduction for single taxpayers for 2018 was $12,000.

a. What is Pierre's 2018 state income tax deduction? $

b. How much of the $1,544 will Pierre include in his 2019 gross income? $