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.