State tax refund

[LMathey]

I am preparing a return for a client that had a large state tax refund from 2006 which he received in 2007. He was also in AMT in 2006. I just re-ran the return without the state tax amount and the tax did not change since he was still in AMT. With this in mind I do not think I need to report the refund on his 2007 1040 because of the tax benefit rule.

Comments please.

Thanks.

[Roland Slugg]

Correct

That is correct. (Code §111(a))

[LMathey]

Thanks

Thanks for your response. I was very surprised when my tax program carried forward the refund amount but totally disregarded the AMT effect.