There should be an elementary question section, but I'm struggling on this and Kevin would kill me for relying on my tax software.
High net worth individual.
In 2012, TP is $20,000 deep into AMT. He has a 2012 State Refund of $80K and a $5K city refund.
None of his 2011 ($50k) state/local refunds were taxable in 2012.
In 2013, his AGI is high enough so that there is NO AMT, but my software is taxing the whole $85K ($80+$5) from 2012 as a taxable refund on page one.
If he received no benefit in 2012 (because of AMT), why would the entire $85k be taxable in 2013?