Tax Answers

March 10, 1994

Here is an answer from members of the Maryland Association of Certified Public Accountants to a reader's tax question. The Sun will publish answers through April 15.

Q: I receive separate monthly Social Security checks for myself and my dependent children. Do I have to report my children's payments on my return?

A: No. The SS-4 form which the Social Security Administration mails to you annually should show your children's benefits being reported under their Social Security numbers, not yours. While the benefits belong to your children, the payments will be made to the legal guardian until your children are 18.

Q: I build wooden model boats from kits as a hobby. In 1992 I bought a kit for $1,500, my cost basis, and constructed it. In 1993 I donated this boat to the Bonnie Blink Home, a charitable concern of the Masons. At the time of the donation, which was more than one year after the building of the model, an unofficial appraiser said the boat had a market value of $8,000. An official written appraisal can be obtained. How would I establish and document this deduction on my 1993 Form 1040?

A: The model boat would be deductible as a charitable contribution but is limited to the fair market value of the property ($8,000), less the amount that would be considered ordinary income if it were sold ($6,500). Therefore, you can deduct only the $1,500 cost basis for this donated property.

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 (410) 783-2517. Callers are encouraged to leave their names and phone numbers. Names will not be published.

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