I have a home, worth $210,000 today, that I bought for $150,000 two years ago. I am going through a divorce and will be giving my wife $20,000 as compensation for the equity we have built in the property while we were married. May I add the $20,000 to my basis in the property? Will my wife have to declare the $20,000 as capital gain income? If not, is there any way to deduct this expense, or is it a tax-free award to my wife? If I obtain a second mortgage to pay this amount, is the monthly interest fully deductible?

These are questions your attorney is in a better position to answer, in the light of your particular circumstances. In general, however, the $20,000 will not be taxable income to your wife; no capital gain or loss is recognized on a property transfer incident to a divorce. And you may not add the $20,000 to your basis, which remains at the original cost plus any capital improvements less any casualty losses.

Deductibility of the interest on a second mortgage is a little more complicated. First, it must be a true second mortgage, secured by the residence -- not just a personal loan. If so, then the interest will be fully deductible if the total of the new $20,000 loan plus the outstanding balance on the first mortgage doesn't exceed the basis as defined above. You may comfortably meet this requirement with a reasonably large initial down payment plus a couple of years of equity payments on the first mortgage.

For the benefit of other readers: If the total of the two mortgages exceeds the basis -- and the mortgage proceeds are not used for education or medical expenses -- then only the interest on that part of the second mortgage that doesn't exceed the basis would be fully deductible. A deduction for the excess interest would be phased out -- 65 percent allowed in 1987, 40 percent in 1988, 20 in 1989, 10 in 1990, then zero.

We are in the process of selling our house to our daughter and son-in-law. They will assume the existing mortgage and give us a second trust at a market interest rate. I am 60 years old and have lived in the house for 17 years. Can we assume that the interest payments are not taxable, since we qualify for the one-time exemption on the profits from sale of a house?

No. As you say in your letter, the exemption applies to the profits from the sale. Each second trust payment you receive has three parts. The part that represents a return to you of your principal (based on the ratio of your basis to the selling price) is not taxable under any circumstances.

The second part, representing the profit (up to the $125,000 ceiling) is not subject to tax by virtue of your one-time exclusion. (This would be true also of a rollover to another residence.) But the part of each payment that represents interest on the unpaid balance is taxable income and must be reported on your tax return.

An automobile used for business purposes has been depreciated down to zero. If we sell the car, we would have to report the sale price as income -- and pay tax on it. If instead we donate the car -- for example, to a high school auto repair class -- can we take the book value of the car as a charitable contribution?

No. The fair market value of depreciable property contributed to a qualifying charitable or educational organization must always be reduced by the potential ordinary gain resulting from the depreciation.

In the Nov. 9 column, I wrote that the payment of an entry fee to a life care community wouldn't qualify as a residence rollover for deferral of tax on sale of their home. This is true; but I also said the payment was not tax deductible any other way either. Several readers wrote to point out -- correctly -- that if the life care agreement required a specified amount allocable to lifetime medical care, that part of the down payment (and of continuing monthly payments as well) could be claimed as an itemized medical expense on Schedule A.Abramson is a family financial counselor and tax adviser.

Questions of general interest on tax matters, insurance, investments, estate planning and other aspects of family finances will be answered in this column. Advice cannot be given on an individual basis. Address all questions to E.M. Abramson, The Washington Post, Business News, 1150 15th ST. NW, Washington, D.C. 20071