This is the second part of the example (pasted the first part twice)
Situation 2: State income tax refund not includable. In 2019, B received a $750 refund of state income taxes paid in 2018. Had B paid only the proper amount of state income tax in 2018, B’s state and local tax deduction would have remained the same ($10,000) and B’s itemized deductions would have remained the same ($15,000). B received no tax benefit from the overpayment of $750 in state income tax in 2018. Thus, B is not required to include the $750 state income tax refund in B’s gross income in 2019.
