Members of the Maryland Association of Certified Public...

Tax questions

February 12, 1997

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

Q. I have been told that the initial licensing fee for a physician is not deductible as an ordinary business expense, although apparently it is in subsequent years. Does the same rule apply to the DEA permit that's required for physicians to dispense drugs?

A. Permit and license fees paid annually are considered ordinary and necessary business expenses. DEA permits that are paid on an annual or semiannual basis are deductible when paid. However, any expense that is paid before the actual commencement of business is not deductible until you are actually engaged in a trade or business, and then it is written off over a period of years.

Q. If you have filed for bankruptcy, is there any effect on your income tax refund?

A. If you have already filed for bankruptcy, your tax refund would become part of your bankruptcy estate. The IRS may not claim this refund for the prior year unpaid tax without permission from the bankruptcy court.

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

To ask a tax question, call Sundial at (410) 783-1800. Call 268-7736 in Anne Arundel County, 836-5028 in Harford County and 848-0338 in Carroll County. Using a Touch-Tone phone, punch in the four-digit code 6225 after you hear the greeting.

Readers also can e-mail questions through The Sun's Website -- www.sunspot.net. Visitors to the Website will be able to access an archive of the questions and answers as well as other useful tax information and links.

Selected questions will be answered in the Business section. No questions will be answered by phone.

Pub Date: 2/12/97

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