Question: In 2 0 2 4 , Aurora received a $ 4 0 , 5 0 0 bonus computed as a percentage of profits. In 2

In 2024, Aurora received a $40,500 bonus computed as a percentage of profits. In 2025, Aurora's employer determined that the 2024 profits had been incorrectly computed, and Aurora had to refund the $12,150 in 2025. Assume that Aurora was in the 35% tax bracket in 2024 but in the 12% bracket in 2025.
If required, round your final answers to the nearest dollar.
a. In 2024, how much is Aurora required to include in gross income?
$
b. In 2025, what is the amount of the deduction Aurora can claim?
What is the reduction in taxes for 2025 as a result of the deduction?
$
In 2 0 2 4 , Aurora received a $ 4 0 , 5 0 0

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