Members of the Maryland Association of Certified Public...

Tax answers

March 14, 1996

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

Q: I invested $10,990 in an invention that never materialized. Can I declare this as a loss?

A: Under the hobby loss rules, it must be demonstrated that the invention constituted a business activity entered into for profit. If deemed to be a business activity, the expenses would be deductible as ordinary losses on Schedule C; expenses incurred for a hobby would not be. A tax professional should be consulted to determine how hobby loss rules would apply in your case.

Q: I don't itemize my tax returns, but I have properties in Florida, on which I pay the state property taxes on each year. Can I deduct the state taxes in addition to the standard deduction, and where do I enter these? Can I claim anything on my Maryland return?

A: Real estate property taxes are deductible only as itemized deductions, on Schedule A of Form 1040, and cannot be deducted in addition to the standard deduction. Itemized deductions should be calculated each year and compared to the standard deduction. Then, the method most beneficial should be used. In addition, if itemizing is most beneficial, then you can claim the Florida taxes on your Maryland return.

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

A joint service from The Sun and the Maryland Association of Certified Public Accountants can help you with your tax queries. Association members, all CPAs, will answer questions from readers until April 15. To ask a tax question, call Sundial, The Sun's telephone information service, at (410) 783-1800. Using a touch-tone phone, enter 6225 after you hear the greeting.

Callers are asked to leave their names and phone numbers, should questions need to be clarified. Selected questions will be answered in the Business section. No questions will be answered by phone. Names and numbers will not be published.

Pub Date: 3/14/96

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