UNDER 65? THRESHOLD FOR FILING IS $5,900

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, April 12, 1993                   TAG: 9304100024
SECTION: BUSINESS                    PAGE: A-8   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium
UNDER 65? THRESHOLD FOR FILING IS $5,900
Members of the Roanoke chapter of the Virginia Society of Certified Public Accountants have answered tax-related questions from readers of the Roanoke Times & World-News. The feature ends with today's questions.
Q: I am a widow of two years. I became 65 years old on Feb. 10, 1993. My income last year was: $6,440 from Social Security, $1,878.63 in state retirement and $1,113.63 in interest on money in the bank. I don't think I will have to file federal income tax for 1992, but I am not sure. Can you advise me?
A: The threshold for filing for a single person under age 65 is $5,900 for 1992. This is most likely the filing status you would be using. You could use the Qualifying widow filing status for two years after the death of your spouse only if you had a dependent child living with you and you were not remarried. Because you were 64 at the end of 1992 and your gross income exceeded $5,900, you will need to file for 1992. Your Social Security income will not be taxable to you as your modified adjusted gross income is less than $25,000. It is necessary to file Form 1040 or 1040A to document this. You could also file Form 1040EZ because none of your benefits are taxable.
Answered by Marty K. Gilmore of McLeod & Co.
Q: If you buy a $10,000 maturity value CMO (made up of FHLMC, FNMA, bonds) at $9,700 (original issue discount of $300) and it is retired early, how much interest do you declare on Schedule B if the 1099 original issue discount shows more or less than the $300.
A: If you purchased the CMO (collateralized mortgage obligation) on its original issue date, the amount of OID (original issue discount) and other interest reported to you on your 1099 OID should be the amount you report on Schedule B. If you purchased the CMO after the original issue date it is possible that you paid an acquisition premium or received a market discount. This would adjust the amount of OID you included in income.
Your broker should have provided you with an additional statement by March 15, which would enable you to determine your market discount or premium. The amount of OID which you report each year is calculated based upon a reasonable assumed prepayment rate for the underlying mortgages in your CMO. Adjustments are made when actual prepayments differ from the assumed. Most likely, you will have reported some OID in prior years, as well as other interest, and the amount reflected on your 1099-OID will not equal exactly $300.
Please keep in mind that any OID recognized in prior years will increase your cost basis upon sale. If you have further questions you may wish to consult IRS Publication 938, Real Estate Mortgage Investment Conduits Reporting Information and Pub. 1212, Investment Income Expenses.

by Bhavesh Jinadra by CNB