Tax Answers

March 31, 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: Do I have to pay federal or state tax on a rebate I received from Baltimore Gas and Electric Co. after I had a new energy-efficient furnace installed?

A: No. The rebate you received from Baltimore Gas and Electric on the installation of your new energy-efficient furnace in your home is not taxable income. The BG&E program is similar to rebate programs that some auto manufacturers offer on the purchase of a personal vehicle. The IRS has ruled that the rebates on those programs are not taxable income. It is, however, in all cases considered to be a reduction in the purchase price of the asset.

If your home is partially used for business, is a rental property you own, or you sell your house, the rebate question becomes a bit more complex and should be looked at closely.

Q: A: If you're given a gift of stock and you sell it, is that considered income for that year? If so, how do you figure how much to report? And if you don't sell it, is that still considered income?

A: If you receive a gift of stock, you then "own" the shares. Therefore, your basis in the stock is whatever the donor's basis ++ was or the fair market value at the date of the gift, whichever is less. If you sell the stock you may have a taxable gain that you'll calculate as the amount you sold the stock for less the acquired basis from the donor. If the stock is not sold, then there is no income to report.

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 Names will not be published.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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