From: utzoo!decvax!harpo!ihnp4!ixn5c!inuxc!pur-ee!uiucdcs!gear
Newsgroups: net.taxes
Title: Re: Deduction questions... - (nf)
Article-I.D.: uiucdcs.1373
Posted: Mon Jan 24 22:37:15 1983
Received: Thu Jan 27 20:25:46 1983

#R:ihuxx:-31400:uiucdcs:13200004:000:1038
uiucdcs!gear    Jan 24 22:06:00 1983

I just read a newspaper article giving the rules for 82.  If you trust
such a source, they are:

Method II:  You can take a 10% investment tax credit in 82 if you
give it a life of more than 3 years.
A computer must be given a life of 5 years.  You can deduct as follows:

	82	15%	= 750
	83	22%	=1100
   84 - 86	21%	=1050 each year.

You can do this on full price.  (That is, you don't have to reduce the price
by the tax credit.)  For a $5,000 computer I computed the
following example:  50% tax bracket, assume tax savings invested
in something yielding 10% AFTER tax return per annum.  Using method II
you would have $3,750.89 invested after filing for 86.  Using method III
(expense it first year) you would have $3,660.25.  Example moves in
favor of method II as tax bracket is lowered, in favor of method III
as available after tax return rate increases.  A good numerical
programmer could plot the graph of the break point for rate of return
versus tax bracket.  I'm just a numerical analyst and could never do that
without error.