Tax Answers

March 02, 1994

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

Q: I refinanced in 1992 and paid points. I refinanced again this year and didn't pay points. Can I write off the points this year? I understand I can as I have settled the first loan.

A: Yes, you can write off the balance of the points you amortized from your 1992 refinancing because you paid off that loan. (This is assuming that the loan was paid off in 1993. If it was not paid off until 1994, you must amortize another year's portion in 1993 and write off the balance in 1994).

Q: I have rental property and a tenant gave me a check that bounced; subsequently the person left the apartment. Can I take a loss for the amount of rent I lost because of the bad check?

A: Unless you reported the bad check as rental income on a prior year's return, you cannot take a loss for the amount of the bad check. The mere fact that the check is bad only precludes you from recognizing the income. It does not create a deductible loss. You may, however, deduct any costs incurred in collecting on the check. If the check is "made good," then you can include it as income on Schedule E of Form 1040. See IRS Publication 527: Residential Rental Property, and the instructions for Schedule E, Form 1040.

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 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 Sun's Business News Department at (410) 783-2517. Callers are encouraged, but not required, to leave their names and phone numbers. Questions will not be answered by phone.

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