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

DATE: MONDAY, January 16, 1995                   TAG: 9501260012
SECTION: MONEY                    PAGE: A-8   EDITION: METRO  
SOURCE: MAG POFF
DATELINE:                                 LENGTH: Medium

INHERITED STOCKS RESULT IN NEW TAX BRACKET, AND POSSIBLY, A PENALTY

Q: I am 87 years old. For several years, my income has been a figure below the level for reporting tax liability for a single person. During 1994, I inherited under joint and survivorship arrangement stocks that increase my income to taxable status. What is my tax liability on the approximate amount of $40,000, and must I file an estimated tax return?

A: You must make quarterly reports of your income, according to Harry Schwarz, a certified public accountant with the Roanoke firm of H. Schwarz & Co. Today is the deadline for mailing the final installment for 1994 income.

You may have a problem, however, and may have to pay a penalty. Schwarz said the Internal Revenue Service deems interest and dividends to have been paid throughout the year. Therefore, you should have paid for all quarters, and the IRS may penalize you for failure to pay on time. If you received the money late in the year, you should attach that explanation to your fourth-quarter report and mail it in with the full annual payment.

Schwarz said it is impossible to state the tax liability for a specific income because each person's situation varies so markedly. It will depend on your exemptions and deductions.

Old bond's only value may be as collectible

Q: I have a bond, payable to the bearer, that was issued by the town of Petersburg April 22, 1850, in the amount of $5,000. It had interest of 6 percent a year for 20 years and was payable in August 1870. Someone has written across the face of the bond "Paid August 9th, 1871." I would like to find out what it is worth or if it can be collected.

A: Rob Blount, finance director for the city of Petersburg, said the money cannot be collected because it has already been paid. Someone collected the money in 1871. The notation written on your bond follows practice that was common in the last century, he said. Thus, the bond has no further value as a financial instrument.

However, old bonds sometimes do have value. Blount said Petersburg recently cashed a bond that was due in 1950 because the money had never been paid.

He said your old bond might have some value as a collectible. Blount suggested that you visit antique dealers and antique shows in your area to see if a dealer will buy it from you. Its value would depend on the price a dealer is willing to give you.

by CNB