*TC Members of the Maryland Association of Certified...

Tax questions

February 27, 1997

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

Q. I received some stock as a dividend on stocks I already owned. Is this stock dividend reportable at the amount it was on the date of distribution? Or is it not taxed until such time as it is sold?

A. Generally, the value of the stock received as a stock dividend (similar to a stock split) is not reportable when received. But a corporation's distribution of stock in another corporation, or the right to buy stock in another corporation, is reportable and taxable. If any shareholder has to option to take cash or other property, then the distribution is taxable. Your best tax information will probably come from the company at year-end tax time.

Q. If you have an unpaid Maryland tax liability from a business -- a corporation that was dissolved in 1995 -- can the state attach your tax refund from your personal joint return?

A. Generally, an individual has no personal liability for corporate income taxes, and the state cannot attach your personal income tax refund. However, income taxes withheld from employees of the corporation and sales taxes collected but not remitted are considered to be held in trust for the state. If withheld income and sales taxes are not paid by the corporation, the state can collect from any officer who exercised control over the fiscal management of the corporation.

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 Web site -- www.sunspot.net.

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

Pub Date: 2/27/97

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