Including the Credit or Refund in Income Include any credit or refund of excise taxes on fuels in your grossincome if you included the cost of the fuel as an expense deductionthat reduced your income tax liability. Which year you include a credit or refund in gross income dependson whether you use the cash or an accrual method of accounting. Cash method.If you use the cash method and file a claim for refund, include therefund in gross income for the tax year in which you receive therefund. If you claim a credit on your income tax return, include thecredit in gross income for the tax year in which you file Form 4136.If you file an amended return and claim a credit, include the creditin gross income for the tax year in which you receive it. Example.cheap hotel in Palma de MallorcaEd Brown, a cash basis farmer, filed his 1999 Form 1040 on March 1,2000. On his Schedule F, he deducted the total cost of gasoline(including $110 of excise taxes) used on the farm for farmingpurposes. Then, on Form 4136, he claimed the $110 as a credit. Edreports the $110 as other income on line 10 of his 2000 Schedule F. Accrual method.If you use an accrual method, include the entire claim in grossincome for the tax year in which you used the fuels. It does notmatter if an accrual basis taxpayer filed for a quarterly refund orclaimed the entire amount as a credit. Example.Todd Green, an accrual basis farmer, files his 1999 Form 1040 onApril 17, 2000. On Schedule F, he deducts the total cost of gasoline(including $155 of excise taxes) that he used on the farm during 1999.On Form 4136, Todd claims the $155 as a credit. He reports the $155 asother income on line 10 of his 1999 Schedule F.