Tax Answers

March 11, 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.

I'm an 87-year-old man with a married daughter. Because it's hard for me to get around, I want to put my savings account in both names as joint owners in case I need her to go and draw some money out. Can I report the interest on this joint account on my tax return only? Also I have a bond that came due in May this year and when I redeemed it it was a little more than the cost that I had paid for it. Do I declare that as a long-term capital gain?

A: State law determines ownership of joint accounts and how much each joint tenant is entitled to share in the interest income. Check with an attorney to determine the nature of your account. Be aware that while state law determines legal ownership of the account, the 1099-INT reporting the interest to the IRS will generally be mailed to the first Social Security number shown on the account.

As far as your bond is concerned, you generally treat your gain as a long-term capital gain if you held the bond for more than a year. Your gain is the difference between the amount you realized on the redemption, sale or exchange and your basis in the bond. Your basis, generally is your cost; however, other things such as when it was purchased can impact the basis. You'll want to gather your records to determine if there's been any impact on the basis since you purchased it.

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 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. Names will not be published. Questions will not be answered by phone.

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