April 9, 2000
Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions in advance of the April 17 filing deadline. I am legally separated from my wife, and in our agreement I promised to give her one-half of my police pension, which I'm presently receiving and paying taxes on. Can I claim this as alimony or how would I claim it? In this agreement we agreed to pay our own taxes. Only if the payments are made under a post-1984 divorce or written separation agreement can they be deducted as alimony.
February 17, 1998
Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.Q.Under what circumstances or conditions is sick pay not taxable?A. Sick pay is not taxable only if the sick pay is received from a plan to which the taxpayer pays all or part of the premium. If the employee paid all of it, the pay is not taxable; if the employer and employee both contributed, the percentage the employee pays is nontaxable.0 Aaron Bloom, CPA, Reznick Fedder & SilvermanThe above advice is for general purposes only and is not intended as legal, accounting or tax advice.
December 3, 2000
I've always heard that it's a good idea to keep several months' salary readily available for emergencies. Up until now we've done so, keeping it in a money-market account. A financial planner suggested that another option would be to use the cash reserve to make a larger down payment when we buy a house - which we plan to do soon - and obtain a line of credit using the house equity for emergencies instead of keeping it on hand. Is this a good or not-so-good idea in your opinion? The problem with taking out a home-equity line of credit for emergencies is that you have to pay the money back, plus interest.
August 20, 2002
WASHINGTON - The Internal Revenue Service is demanding data from dozens of banks, accounting firms, law firms and other financial advisers on clients who seek to avoid taxes. The IRS has issued 150 summonses since late January as part of a crackdown on sophisticated accounting that companies use to avoid taxes, such as through offshore entities, said David Harris, manager of the IRS tax shelter analysis office. Several requests have been referred to the Justice Department for possible court action, he said.
April 14, 1994
Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through Friday.Q: I had a 401(k) plan with my employer in which I made investments in various areas, including company stock. At the termination of my employment, I paid income tax on the fair market value of the company stock. What is my basis of the company stock I now hold? Is it the cost contribution I've made in all the various investments or the fair market value of the company stock determination?