Tax Exemptions

Your 18-year-old is on the way to college, and you're tapping into that stash of money you've accumulated over the years in one of those tax-free college savings plans. ? But if you want to pay for more than room, board, tuition and books, you'd better check with the federal revenooers first. Buy the wrong thing and you could be hit with taxes and a 10% penalty on your earnings. ? Want to use the money to buy a laptop computer for the kid? Maybe you can, maybe not.

A nonprofit housing organization has received a federal tax exemption retroactive to 2004 despite being linked to a corruption investigation into the Los Angeles labor union that founded it, according to Internal Revenue Service records and officials. The charity had been operating without an exemption since the Service Employees International Union local launched it more than four years ago.

Wrapped in the promise of big new tax deductions, President Bush's plan for encouraging more people to get health insurance is one of the most sweeping changes yet proposed for financing medical care -- bringing potential benefits for some, new taxes and new uncertainties for others.

The state Assembly approved a measure Thursday clarifying tax law to permit the families of the five firefighters who died in October's 40,000-acre wildfire near Palm Springs to receive the more than $1 million in donations collected for them.

The U.S. Supreme Court may take up a case that challenges states' rights to exempt their own bonds from local taxation if they tax the interest paid on other states' bonds. The case could have widespread ramifications for states and municipal bond investors if the high court were to decide that the current tax structure was unconstitutional.

For-profit hospitals in California provide free care to indigent patients at rates equal to nonprofit hospitals that receive income and property tax exemptions, according to a report released Thursday by the state auditor's office.

The Democratic presidential race heated up Saturday, with Barack Obama charging that rival John Edwards committed campaign hypocrisy by deriding political organizations called 527s at the same time he allegedly will benefit from their spending. Stumping in central Iowa three days before Christmas, Obama described the former North Carolina senator as "a good man," and said both agreed that special interests and lobbyists "have too much influence in Washington."

Dan Schuessler didn't plan to run a small business. He has a full-time job at Intel. But the 28-year-old found a good deal on shoes one day and was convinced that he could resell them at a profit on EBay. That was two years ago. Now, in a good month, he will sell 100 pairs of men's loafers online. The moonlighting that once brought in only "pocket change" has become truly profitable, he said. With the growing popularity of online sales -- EBay boasts about 2.

The Internal Revenue Service has canceled the tax-exempt status of some of the nation's largest educational credit counseling services after audits revealed they existed mainly to prey on debt-ridden customers, Commissioner Mark Everson said Monday. "These organizations have not been operating for the public good and don't deserve tax-exempt status," Everson said. "They have poisoned an entire sector of the charitable community."

The Internal Revenue Service has rejected tax-exempt status for two California municipal bond issues used for a hotel and convention center. The $145.5 million in bonds were sold for the Cabazon Band of Mission Indians in Riverside County. They include $110.5 million of revenue bonds issued by the California Statewide Communities Development Authority (East Valley Tourist Development Authority-Series 2003A) and $35 million of subordinate revenue bonds issued by the same entities (Series 2003B).