Members of the Maryland Association of Certified Public...

TAX ANSWERS

April 05, 1995

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.

Q: I had an IRA deducted from my federal income tax in 1992 and 1993. But when filing my state income tax, I omitted the allowable IRA deduction on my state return. Can I file an amended state return for '92 and '93 and, if I'm allowed, what forms are needed, and where are they available?

A: Yes, you can file an amended state return to claim your IRA deduction for 1992 and 1993; however, you must do so within three years of the date that each original return was filed, or, within two years of the date that the tax for each was paid, whichever is later. You must report the change for each year on separate forms. Use Maryland Form 502X, which is available at all local branch offices of the state comptroller. Check the Maryland government blue pages of your phone book for the office nearest you.

Q: I was an owner of a limited partnership that dealt in mortgages. The partnership was sold and I got some money for it in 1993. I received a K-1 Form 1065, which lists under income, item 7 of income loss tax schedule, $8,564, and it says that this is cancellation of indebtedness income. How and where do I report this on my return?

A: Income received from a limited partnership interest that is cancellation of indebtedness income may require different treatments, depending on the nature of the indebtedness and the partners' special circumstances. In general, this income is considered ordinary income to the partner and should be reported together with the other partnership "ordinary" income or loss on Schedule E.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

To submit a question, call Sundial, The Sun's telephone information service, at (410) 783-1800. In Anne Arundel County call 268-7736, in Harford 836-5028, and in Carroll 848-0338. Using a touch-tone phone, enter 6225 after the greeting. Push 1 to submit a tax question; push 2 to hear a tax tip.

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