Ernest uses the cash method of accounting and lives in a state that imposes an income tax (including withholding from wages). On April 14, 2009, he files his state return for 2008, paying an additional $600 in state income taxes. During 2009, his withholdings for state income tax purposes amount to $3,700.
On April 12, 2009, he files his state return for 2008 claiming a refund of $900. Ernest receives the refund on August 3, 2009. If Ernest itemizes deductions, how much may he claim as a deduction for state income taxes on his Federal return for calendar year 2009 (filed in April, 2010)?
a. $3,400.
b. $3,700.
c. $3,900.
d. $4,300.
e. None of the above.