Tax Court

The tax law allows a deduction for mortgage interest on a qualified primary residence and one vacation home. Specifically, to be deductible, the purpose of the mortgage must be for acquisition or improvement.A careful reading of the law reflects that points charged by a bank upon the refinancing of a mortgage also are deductible as interest expense.However, the law does not specify whether refinancing points are fully deductible in the year paid or if they must be prorated over the life of the new mortgage.

If you are unemployed or at a dead end in your career, you may decide to return to school to acquire new skills. Are there any tax benefits? Perhaps -- since there are no specific statutory provisions to indicate the boundaries of the educational deduction.There is a general provision that "ordinary and necessary expenses paid or incurred [while] carrying on a trade or business" can be deducted. This is troublesome for someone who is unemployed, says David M. Hudson, professor of law at the University of Florida and a contributing editor to Bender's Federal Tax Service.

Baltimore has agreed to refund $5.5 million in real estate taxes to the owners of the USF&G Tower -- one of what could be a series of hefty paybacks to a score of property owners in the city's once booming downtown.Moreover, the owner of the tower's taxes will be slashed by more than 60 percent over the next three years.The agreement comes as Baltimore officials are cutting municipal spending and suggesting a controversial increase in the city's income tax -- all to steady its already shaky financial condition.

The owners of the EnterTRAINment line said they will close the business if a bill exempting them from paying more than $300,000 in back amusement and admissions taxes fails."

Unless the EnterTRAINment Line decides to appeal, Maryland's Tax Court has had the final word on whether the rail excursion company owes the towns of Westminster and Union Bridge more than $300,000 in back amusement and admissions taxes. The court last week upheld the towns' claims and the legitimacy of the tax.Tax Court Judge William B. Calvert dismissed the company's argument that it was not subject to local taxes because it is a railroad. While federal laws and regulations prevent local governments from imposing certain types of taxes on rail carriers, EnterTRAINment's owners and their lawyers misread those rules.

In a victory for Anne Arundel County, the state's highest court dismissed yesterday a developers' lawsuit seeking millions of dollars in refunds of money and property they gave the government in exchange for exemptions allowing them to build homes in areas where schools and roads were overburdened. The unanimous Court of Appeals ruling ends the prospect of the county being ordered to refund what developers claimed was more than $7 million the county collected over more than a decade in deals they said evaded county laws and nearly amounted to extortion.

WASHINGTON -- The Supreme Court blocked an attempt in federal court yesterday by Maryland builder NVR Homes Inc. to collect a refund of about $6 million in taxes and interest from Maryland state and local governments. The Supreme Court refused to consider the homebuilder's appeal, in which NVR Homes claimed that it did not have to pay transfer and recording taxes to Maryland state and local governments during the time it was in bankruptcy proceedings and reorganizing. NVR Homes was claiming a total refund of $6.3 million, plus about $500,000 in interest, in the federal suit and a companion lawsuit in Maryland courts.

A Baltimore County Circuit Court judge has ordered the county to refund more than $600,000 in electricity taxes to five companies, agreeing with a lower court that the companies were overtaxed.The county immediately announced it would appeal to the Court of Special Appeals and Circuit Judge Robert E. Cahill Sr. stayed his order."We hope we will be vindicated on appeal," says Michael McMahon, an assistant county attorney on the case. "If we lose, then we have to come up with the money."Should Baltimore County lose on appeal, the court case could have an impact on four other counties and the city, which have similar taxes on the consumption of electricity.

WASHINGTON -- Workers who collect money on their claims of age bias or other forms of discrimination on the job will have to await word from the Supreme Court on whether they must pay federal taxes on those awards.Lower federal courts are in dispute on that issue, leading the justices to vote yesterday to settle it, in a case involving a tax-deduction claim of more than $140,000 by a former United Airlines pilot.The Internal Revenue Service took the issue to the Supreme Court, arguing that the outcome of the case would affect tax reporting on verdicts not only in age-bias cases but also in a variety of other discrimination cases under federal and state law.The result, the IRS said, will affect the tax liability of many thousands of individuals.

Tribune Co. expressed cautious optimism yesterday that it would succeed in overturning a tax ruling costing the company $1 billion, even as its stock price fell to its lowest level in nearly four years. Still, executives pledged to immediately pay the back taxes and interest to the Internal Revenue Service stemming from two transactions carried out by the former Times Mirror Co., before its takeover by Tribune in 2000. As the stock slid by more than 4 percent yesterday to its lowest level since November 2001, Tribune said the payment won't require the sale of assets because $250 million had been set aside and additional money was raised last month through bond financing.