Pay The Tax

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.What are the short- and long-term capital gains rates when selling stock? In addition, if you sell stock and realize a capital gain, when is tax required to be paid on that capital gain, quarterly or immediately?Substantial changes have occurred in this area. Effective last year, the top federal long- term capital gain rate on a stock sale has been reduced to 20 percent.

The trick with congressmen isn't merely stopping them from passing bad legislation. It's getting them to fix the terrible laws they've already enacted. For years, thousands of victims of a bizarre booby trap in the tax code have been pleading for help from Congress and the Internal Revenue Service. Their situation is so pitiful -- and the law so contrary to decency and common sense -- that Genghis Khan would have granted relief and apologized. Congress won't do either. After months of hearings, meetings and patient pleading, the legislature failed to assist people who owe taxes on phantom stock option income from the 1990s technology boom.

The dispute between the EnterTRAINment Line and the state comptroller's office over $329,000 in back amusement and sales taxes has implications far beyond the excursion train company based in Union Bridge.The venture's financial health also affects Carroll County's nascent tourist industry; next to the Carroll County Farm Museum, the train, which conducts fall sightseeing tours to Blue Ridge Summit, Pa., evening murder mystery trips and transports Santa himself to Westminster, is believed to be the county's second largest tourist draw.

The defeat of the Carroll County commissioners' proposed real estate transfer tax won't have staff members frantically reworking the budget, but it could mean projects are delayed or scrapped. Carroll's legislative delegation voted 4-3 against the tax Tuesday in Annapolis, refusing to support it in the General Assembly. The seven-member delegation will support the county's other proposed bills, including a hotel tax and a tax credit for the elderly. The 1 percent levy on home sales could have generated about $7.5 million in revenue next year, which the commissioners said would have been used for school and roads projects.

WESTMINSTER - Drug dealers in Carroll don't have much in common with Chicago's infamous gangster Al Capone, but County Attorney Chuck W.Thompson hopes a newly enacted ordinance changes some of that.The County Commissioners passed yesterday a law designed to hit drug dealers where it hurts -- in their wallets and pocketbooks. The ordinance levies a 50 percent sales tax on illegal drug transactions, and will penalize dealers who evade the tax."If you remember, they didn't get Al Capone for the other crimes he was accused of," said Thompson, who drafted the law for the county.

75 Years Ago* How To Arrive At Your Income Tax (The following taken from an exchange though a little late for this year's income taxes, and only suggested, perhaps gives the payer as much insight into the computation of his taxes as the instructions which accompany the return sheets.)First take your income,Add wife's income,Divide by your eldest son's age,Add your telephone number,Subtract your auto license number,Add electric light billdivided by number of kilowatts,Multiply by your father's age,Add number of gold fillings in teeth,Add your house number,Subtract your wife's age (approximate)

We receive dividends from a mutual fund that are reinvested, and then when we sell the shares we pay a capital gains. How do we keep track of all these dividend reinvestments so that we don't have to pay the tax on that? Some taxpayers do it with pencil and paper, others by computer. But always remember to keep track. Why? If you own shares in a mutual fund outside a tax-sheltered account, the dividends your fund pays get taxed - even if you reinvest them to buy more shares. Your fund mails you a form each year.

By introducing legislation to exempt the EnterTRAINment line from amusement and admission taxes, Republican state senators Timothy R. Ferguson and Larry E. Haines have provoked an interesting debate: Whose interests should the legislators be looking out for -- a commercial enterprise that generates jobs and income or a couple of Carroll municipalities that depend on amusement and admission taxes to finance their budgets?EnterTRAINment, a Carroll County-based railroad that provides scenic excursions, owes about $330,000 in back taxes that the previous owner neglected to pay. Although the state collects the tax payments, this is actually a local levy that the municipalities set. According to the Maryland comptroller's office, EnterTRAINment must pay the tax to Union Bridge and Westminster, where the train trips originate.

The trick with congressmen isn't merely stopping them from passing bad legislation. It's getting them to fix the terrible laws they've already enacted. For years, thousands of victims of a bizarre booby trap in the tax code have been pleading for help from Congress and the Internal Revenue Service. Their situation is so pitiful -- and the law so contrary to decency and common sense -- that Genghis Khan would have granted relief and apologized. Congress won't do either. After months of hearings, meetings and patient pleading, the legislature failed to assist people who owe taxes on phantom stock option income from the 1990s technology boom.

Howard County officials are proposing to lower a special tax that some athletic facilities say is threatening to drive them out of business -- or into another county.The County Council will hold a public hearing Monday on legislation that would lower the admission and amusement tax rate for indoor athletic facilities for tennis, baseball, basketball, soccer and volleyball from 7.5 percent of gross receipts to 5 percent."We need the amusement tax," said County Executive Charles I. Ecker, referring to the $1.1 million it generates.

We receive dividends from a mutual fund that are reinvested, and then when we sell the shares we pay a capital gains. How do we keep track of all these dividend reinvestments so that we don't have to pay the tax on that? Some taxpayers do it with pencil and paper, others by computer. But always remember to keep track. Why? If you own shares in a mutual fund outside a tax-sheltered account, the dividends your fund pays get taxed - even if you reinvest them to buy more shares. Your fund mails you a form each year.

BOSTON --For naked class warfare, it is hard to beat the estate tax. "If we were to give a prize for the single worst idea to come forward from a group that's been rife with them, it would be this," fumed Rep. Barney Frank, D-Mass., as the House voted by a healthy margin to phase out the federal tax on inheritances. "Their idea is this: `Let's make the tax code of America better for very rich people. Let's give substantial tax relief to the richest people we can find.'" Does Mr. Frank really believe that?

WASHINGTON - Dozens of Democratic representatives joined united House Republicans yesterday to overwhelmingly approve a measure that would gradually phase out the federal inheritance tax on large estates. The vote nearly reached a two-thirds, veto-proof majority. A total of 279 representatives-214 Republicans and 65 Democrats-favored complete repeal of the tax while 136, all Democrats, were opposed. President Clinton says he will veto the measure but has indicated a willingness to compromise on estate tax relief this election year.

Maryland appears poised to join a growing number of states doing away with their inheritance taxes, but most people won't notice the difference. The tax is unpopular -- even in death, the government gets its take -- but the majority of estates are too small for it to apply. Because of a quirk in the state tax code, most of Maryland's biggest inheritors won't save a dime if the tax is repealed. Those who stand to benefit from the $50 million tax cut are siblings, distant relatives and nonrelatives.

WASHINGTON -- A seasonal foreboding again settles on the republic. H&R Block, which prepares the income-tax forms of about one in seven taxpayers, is broadcasting television commercials featuring the ingeniously cryptic slogan, "We know. Do you?"Those four words capture the ominous mood of March in this country. In America, home of the free and the land of due process, most taxpayers find it impossible to know if they are complying with tax law.As a taxpayer wrote to the commissioner of Inland Revenue (as it then was)

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15. See below for how to submit a question.I converted a traditional IRA with $63,120.63 to a Roth IRA in 1998. My total dollar input to the original IRA was $8,000 in pretax dollars and then $8,000 in after-tax dollars after my employer instituted a retirement plan. How do I properly fill out my tax returns over the next four years?You'll need to complete Form 8606 for 1998 and the subsequent three years.

Maryland appears poised to join a growing number of states doing away with their inheritance taxes, but most people won't notice the difference. The tax is unpopular -- even in death, the government gets its take -- but the majority of estates are too small for it to apply. Because of a quirk in the state tax code, most of Maryland's biggest inheritors won't save a dime if the tax is repealed. Those who stand to benefit from the $50 million tax cut are siblings, distant relatives and nonrelatives.

WITH Social Security reform drawing ever nearer, you need to give some thought to how it might change your life.Nothing certain can be said until a program has actually passed. But a few general principles permeate all the plans for change. Here's the state of play:Social Security won't be allowed to die or be turned into a purely private program. It's the most popular government benefit ever, and will be retained.But it will change. The current system of taxes and benefits cannot support all the boomer retirees, and everyone knows it.The time for fantasy and denial has just about run out. Under current law, the first of the boomers will start drawing early retirement benefits just 10 years from now, when they turn 62. Soon after that, the trickle will turn into a flood.