Tax Answers

March 17, 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: We have an FHA mortgage. Is the amount of money that we're paying as an insurance premium for the FHA mortgage deductible in our taxes?

A: No, FHA mortgage insurance premiums are not deductible on your income tax returns. In addition, unlike many other nondeductible homeownership costs, these premiums do not increase the cost basis of your home for determining future gain or loss upon sale.

Q: In 1989, I bought some TWA preferred stock. When I tried to sell it at the end of the year my broker said that it was worthless. Can I claim the stock as a loss on my 1993 return?

A: You will first have to find out in what taxable year the stock became worthless, so that it can be written off as a capital loss in that year. A broker can help you determine this. If it was before 1993, you can file an amended return to show the loss. There is a seven-year limitation on filing an amended return for this loss.

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 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 Names will not be published.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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