Tax Answers

February 10, 1994

Here are answers from members of the Maryland Association of Certified Public Accountants to readers' tax questions. The Baltimore Sun will publish answers through April 15.

Q: We moved out of state and were building a house on which we had to put down a deposit with the builder. I changed jobs again and moved back into the state. As a result, I lost part of my deposit on the house in the other state. Is that money that I lost on the deposit deductible in any way? On both state and federal returns?

A: No. The lost deposit on the house is not tax deductible. Generally, you cannot deduct a loss on personal assets, and your loss does not qualify as a deductible nonbusiness bad debt or casualty loss. Your loss also would not qualify as a tax-deductible moving expense because you never lived in the house.

Q: I sold a rental property last year. Should I report the capital gains on Schedule D, or is there some other form for reporting the sale of a rental property?

A: The sale of rental property is reported on Form 4797. You'll see that portions of the net gain from this form are carried to Page 1 of Form 1040, line 15, and to Schedule D.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary. Consult with a tax adviser for specific advice.

Readers may submit questions by phone, mail or fax. Selected questions will be answered in The Sun and The Evening Sun.

To ask a tax question by phone, call Sundial, The Sun's telephone information service, at (410) 783-1800. In Anne Arundel County call 268-7736, in Harford County 836-5028, and in Carroll County 848-0338. Using a touch-tone phone, enter 6120 after you hear the greeting.

Written queries may be sent to TAX QUESTIONS, The Baltimore Sun, Business News Department, 501 N. Calvert St., Baltimore, Md. 21278. Fax questions to The Sun's Business News Department at (410) 783-2517. Callers are encouraged, but not required, to leave their names and phone numbers should questions need to be clarified. Questions will not be answered by phone. Names and numbers will not be published.

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