Under the claim-of-right rule, a salary overpayment that is discovered by the employer in the tax year following the year of overpayment:

Under the claim-of-right rule, a salary overpayment that is discovered by the employer in the tax year following the year of overpayment:
A . Can be deducted on a pretax basis from regular wages
B. Cannot be deducted from the employee’s wages because employee has a right to the payment
C. Can be deducted from wages on an after-tax basis
D. Cannot be deducted from wages at all

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Answer: C