Question: I read that the tax deduction for political contributions has been eliminated. What happened to the idea of encouraging small contributions from individuals ?

Answer: Nothing at all. The tax break for contributions to candidates for office and to political parties is alive and well. But there has been a change in the way the tax saving can be taken.

Until now, a taxpayer had a choice of where to claim the contribution: either as an itemized deduction on Schedule A or as a tax credit. Obviously a taxpayer who used the zero bracket instead of itemizing really didn't have this choice; the tax credit was the only way to go.

In 1975 (the latest year for which statistic are available) more than twice as many people used the tax credit as took the deducation. There was some feeling that it was unfair for the choice to be available to some but not all taxpayers.

And the change is in line with the drive for tax return simplification. The existence of alternative methods must -- ipso facto -- be more complicated than a nochoice situation.

Some people are likely to be hurt by elimination of the deducation. To soften the blow, the Revenue Act doubled the allowable ceiling on the tax credit -- from $50 to $100 on a joint return, and up to $50 for singles.

Incidentally, the entire change -- elimination of the tax deduction, doubling of the ceiling -- takes effect on Jan. 1, 1979. The old rules remain in effect for 1978 tax returns.

Question: I am buying a new home, and the bank requires me to pay one point of the mortgage loan. I am also asked to pay one point on the loan being taken by the buyer of my present home. Are these points tax-deductiblen?

Answer: Yes and no. The point you pay to secure the mortgage on your new home is interest expense, deductible on Schedule A in the year paid.

But the point you pay to the lender as an inducement to arrange financing for the buyer of your old home is not deductibel as interest. However, it is considered a selling exepense, and should be used to reduce the net proceeds on the sale.

Question: The new $100,000 tax exemption on sale of a house is great -- but it's a one-time thing. Is that really fair to people like me who have already taken the old $35,000 tax benefit ?

Answer: Surprise -- you get another crack at it! As you said, the $10,000 exclusion -- effective on sale of a residence after July 26, 1978 -- is available just once in a lifetime to each taxpayer (or to both taxpayers together in the case of a husband and wife filling jointly).

But if you're 65 or over, you may elect the $100,000 exclusion even if you have already used the earlier, less generous benefit. So if -- as in your case -- you had bought another residence, you get a chance to take advantage of the new exclusion when you sell your present home.

Several readers questioned the accuracy of my statement (on Nov. 24) that closed-end funds make only cash distributions, as opposed to the option for share distributions from open-end funds.

What I wrote was technically correct. But I failed to mention -- and should have -- that, like most listed corporate stocks, many publicly traded funds do offer dividend reinvestment plans.

By arrangement with the trustee or transfer agent, the owner of shares in one of these funds can have cahs dividends applied to the purchase of a additional shares of the same fund, usually at a reduced brokerage fee because of the quartity purchase.

The technique is different from the issue of new shares at net asset value by an open-end fund. But the net result to the investor is essentially the same in either case. I apologize for any confusion my comments may have generated.