TTB 3-2 #10 taxable state refunds

[AZ-Tax]

I looked at a few threads about this but unless I am missing something, a state refund received in 2007 for 2006 tax return is NOT taxable on the 2007 tax return if the TP did NOT itemize on 2006 tax return regardless of AGI? If there is a phase out anyone know where it begins?

Does that sound correct?

[dyne]

Correct: GENERALLY if the taxpayer did NOT itemize, the state tax refund received during
the following year is NOT taxable. But TTB page 3-22 list some exceptions: AMT is an
exception, If the taxpayer itemized and his 2008 AGI was $159,950 Joint or $79,975 single
and....etc. Also if the taxpayer could be claimed as a dependent is an exception, meaning
I imagine that the state refund would be taxable. Drake Tax Software calculates the amount
which is taxable and it brings the amount over from year to year. This is especially helpful
when only a portion of the state tax refund is taxable.

[Burke]

It is also not taxable if the TP did itemize and took sales taxes instead of income taxes. Or only to the extent the refund exceeds the standard deduction, when refigured.