Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.
Q: My father-in-law was transferred to Florida a few years ago and has been renting out his Maryland home since then. He probably will be returning to Maryland during the next year and wants to move back into the rental house. Will he have to recapture any of the depreciation that he's taken? Also, will he have a huge capital gain because of the depreciation?
A: Not likely. For depreciation to be recaptured or to cause capital gain, your father-in-law would have to sell or exchange the property to trigger a taxable event. The depreciation taken previously merely reduces the basis of the property (the base amount used to compute a gain or loss on a future sale). The tax consequences are deferred until the property is ultimately sold or otherwise disposed of.
Q: I made charitable contributions of $1,000 by a payroll deduction plan. I received no letter of acknowledgment from most of the people who received the money. Is the summarized deduction on the payroll stub sufficient, or do I need a letter of acknowledgment from the organizations as well?
A: You must substantiate your payroll deduction contribution with 1) a pay stub, Form W-2 or other document that your employer provides showing the amount withheld for payment to a charity and 2) a pledge card or other document prepared by the charity, including a statement that the organization does not provide goods or services for any contribution made by payroll deduction.
The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.
Members of the Maryland Association of Certified Public Accountants will answer tax questions from readers until April 15 and also offer a Tax Tip of the Week.
To submit a question, call Sundial, The Sun's telephone information service, at (410) 783-1800. In Anne Arundel County call 268-7736, in Harford County 836-5028, and in Carroll 848-0338. Using a touch-tone phone, enter 6225 after the greeting. Push 1 to submit a tax question; state the question in full. Push 2 to hear the tax tip. Selected questions will be answered in the Business section. No questions will be answered by phone.