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Show Look to reduce your tax bite With the deadline for filing income in-come tax returns a month away, start looking for ways to reduce your tax bite. Dr. Larry K. Bond, extension economist at Utah State University, suggests you might consider exploring ex-ploring depreciation, investment tax credit and expensing of assets. Bond recommends looking at these different combinations and then choosing the best for you. 1. The Internal Revenue Service will allow up to a $5,000 write off of a capital asset in lieu of taking depreciation, Bond says. No investment in-vestment credit is ailowed on the portion expensed. Bond says the expensing portion may not result in a long-term tax savings unless your tax bracket is above 45 percent, although it might give you a tax savings in the year it was taken. It is usually best to expense three-year property if you have a choice, he says. 2. Tax experts suggest that it is usually best to take full investment tax credit, unless your tax bracket is 40 percent or higher. Remember, Bond says, that the amount that can be depreciated is reduced when you take the investment credit. If you already have more investment credit than you can use, there may be no advantage. 3. Those is low tax brackets usually save by taking full in vestment credit where possible. 4. If you expect a serious cash flow problem in 1985, and credit is expensive or hard to get, you may be ahead to use the combination that gives the highest tax savings for the 1984 tax year, rather than in the long run. Bond suggests tht unless you're familiar with the tax laws it might be advisable to consult with a tax specialist. |