Tax Answers

February 11, 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: I am executor of my father's will. He died in January of 1994 and my mother is still alive. What are my functions with regard to his '93 tax return? Do I sign his name, or my name or not at all? If I do sign, exactly what form should I use?

A: You should sign the return with your own name and position of authority, in your case executor, and write "deceased" at the top of the return. It is a good idea to attach a copy of the court appointment to the return if possible. IRS Form 1310 "Statement of Person Claiming Refund Due a Deceased Taxpayer" may also be required as an attachment, so check the instructions to Form 1310 and review IRS Publication 559, "Survivors, Executors and Administrators."

Q: Can I take losses on a Schedule C business income when I have no income to report, just expenses?

A: You will be able to deduct most expenses if your undertaking meets three tests: 1) It must be a trade or business engaged in for profit (vs. a hobby); 2) You must be personally liable or have paid expenses out of your own pocket; 3) You must have materially participated in the business.

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. Selectequestions 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 the greeting.

Written queries may be sent to TAX QUESTIONS, The Baltimore Sun, Business News Department, 501 N. Calvert St., Baltimore 21278. Fax questions to the 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 Names and numbers will not be published.

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