Tax questions

February 04, 1999

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15. Here, MDCPA members answer some basic questions.

What is the personal exemption worth in 1998?

Each exemption you claim (for yourself, your spouse and qualified dependent) on your 1998 tax return is worth $2,700. Certain higher-income individuals may lose part or all of the $2,700 deduction if their adjusted gross income exceeds the threshold amount of their particular filing status. Phase-out begins at: $124,500 for single individuals; $186,800 for married filing jointly; $93,400 married filing separately; and $155,650 for head of household.

If a parent lends an adult child funds to start a business that does not succeed, can the loan be written off?

When you lend money to friends or family and you're not repaid, you can recover part of the bad debt through a tax deduction. These are typically considered nonbusiness bad debts and are deducted on Schedule D of your tax return as a short-term capital loss. You can deduct this from other capital gains, if any, and $3,000 of other income. Any balance left over is deductible as a capital loss carry-over in future years.

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, The Sun's telephone information service, at 410-783-1800. Call 410-268-7736 in Anne Arundel County, 410-836- 5028 in Harford County, 410-848-0338 in Carroll County. Using a Touch-Tone phone, punch in the four-digit code 6225 after the greeting. You can also submit questions by e-mail through The Sun's Web site: www.sunspot.net. Click on Business.

Selected questions will be answered in the Business section. No questions will be answered personally.

Pub Date: 2/04/99

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