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Show Taxing ??? Below are some of the questions ques-tions taxpayers ask IRS. Q. MY home was burglarized recently and I sustained a loss of several thousand dollars. Can I take a deduction for this loss? A. Yes. A personal theft loss is deductible to the extent it exceeds $100 and must be claimed in the year you discover dis-cover the theft. THE AMOUNT of the theft loss deduction is the lesser of: (1) the fair market value of the " property; or (2) your adjusted, basis in the property, that is, generally what you paid in cash or property, with adjustments adjust-ments for depreciation, capital capi-tal expenditures, etc. The theft loss must be reduced by an insurance or other compensation you receive or anticipate receiving for the stolen property and by the $100 limitation. FOR EXAMPLE, if your total to-tal loss equalled $6,000 and you received $3,000 in insurance compensation, your actual loss is $3,000. With the $100 limitation for theft and casualty losses you may deduct $2,900 on your return. If the loss occurred on property held for personal use six months or less or if this was your only theft or casualty loss for the year on property held for personal use, you may report the deduction on lines 25 through 29 of Schedule A, Form 1040. IF THE property was held more than six months, it must be reported on Section A. Part I of Form 4797, Supplemental Schedule of Gains and Losses, along with all other casualty gains and losses on property held over six months. If you had more than one casualty or theft loss during the year, you should first complete Park II, Form 4684, Casualties and Thefts. Q. I just read about a new law which allows individuals who are not self-employed to set up their own retirement savings program. How does this work? A. Under the Pension Reform Act of 1974, eligible individuals may establish their own retirement savings program by making contributions contribu-tions each year equal to either 15 percent of compensation or $1500 per year, whichever is less. SUCH CONTRIBUTIONS are generally tax deductible and create a fund from which the individual can draw income in-come during retirement. To be eligible for the individual in-dividual retirement savings program, an individual must not contribute during any part of the tax year to: AN employer's qualified pension, profit-sharing, stock bonus, annuity or bond-purchase bond-purchase plan; a government retirement plan; an annuity contract purchased by certain tax exempt organizations or public schools; or a plan for self-employed workers. For further information on how to set up an individual retirement re-tirement savings program, read Tax Information on Individual In-dividual Retirement Savings Programs, IRS Publication 590, free from your nearest IRS office. Q. I BOUGHT a new home last month, but did not qualify for the five percent housing credit because the seller could not certify that the sale price of the home was the lowest ever offered. Is it true that this requirement for the housing credit has been changed. A. Yes. A new law may qualify you for the credit if the -seller can certify that -your new principal residence was purchased at the lowest price offered after Feb. 28, 1975. BECAUSE THIS change is retroactive, you may still qualify even though you have already bought the home. You should contact the seller of your home who must certify in writing: (1) that the sale price was the lowest price offered after Feb. 28, 1975; and (2) that construction of the home was begun before March 26, 1975. If you have additional questions ques-tions about the credit, contact Taxpayer Assistance at your nearest IRS office. |