DEDUCTION RELATED TAX STRATEGIES                
                        ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^         

         
      1- REAL ESTATE:
         

      Deducting mortgage points:
      -------------------------

      a- You should make out a separate check for points incurred for the 
      acquisition or  improvement of your  principle residence at closing
      time, rather than adding the points to the mortgage. This gives you
      a lump-sum amount to insure deductibility.

      b- You may not  deduct mortgage  points on  vacation homes,  rental
      units or  refinancing a principle residence.  These mortgage points
      must be amortized over the life of the loan.

      c- A vacation home  would be  considered as a  second-residence and
      would qualify for full mortgage interest deductions.  This is true,
      so long  as it is not rented.  If it is rented,  then special rules
      will apply as listed in the rental property depreciation section.


      Rental property depreciation:
      ----------------------------

      a- Generally,  rental  property  acquired  after 1986  will use the
      straight-line  method of  depreciation  which  is spread  over 27.5
      years for residential income property and 31.5 years for commercial
      property.
      
      b- If you acquired  or constructed your  rental property  through a
      binding contract  on March 1 of 1986,  your depreciation  table may
      come under the prior  depreciation method (grandfathered)  which is
      the 19 year life  using either the straight-line or the accelerated
      175 percent declining-balance method.


      Real Estate expenses:
      --------------------

      a- If you purchase or sell real estate,  you are allowed deductions
      on taxes or  interest charges  collected from you  at closing time.
      Ask the escrow officer or your attorney (a must) to point out these
      costs to you on the closing statement.


      Outline of Tax-Free Income:
      --------------------------

      a- Any gain made on the sale of your home,  if you use the gain for
      the purchase  of a new home  that is equal to  or greater  than the
      house that you sold.

      b- Any gifts that you receive from a friend, relative etc. The gift
      tax is payable by the person giving the gift and not by you.

      Gifts given  by  winning  contests,  lotteries  etc.  are generally
      considered as income and are therefore considered as taxeable.

      c- IRA roll-overs: a roll-over  is not considered taxeable  as long
      as you meet the 6O day time limit to complete the roll-over.

      d- People who receive an inheritance, do not pay taxes.

      e- The beneficiary  of a life insurance policy,  is not subject  to
      taxation.  However,  your estate may be liable  for estate taxes on
      the proceeds.

      f- Property settlements between two parties in a divorce or who are
      in seperation proceedings.

      g- Child support payments to you.  A recipient of  alimony payments
      are taxable, however.

      h- Any money recovered  in lawsuits filed for  personal injuries or
      defamation of character,  for instance.  If you have recovered lost
      wages or other income however, these are taxable.

      i- Workers compensation payments, are not taxable.

      j- Payments for disability, by health insurance plans are tax free,
      if you made the premium payments  yourself. Disibility payments are 
      taxable, if the insurance premiums are paid by your employer.
  
      k- Federal income tax refunds  are not taxable.  However,  any late
      refund interest payments paid by the IRS, are taxable.

      l- State income tax refunds,  if you didn't  itemize deductions  on
      your federal return for that year.

      m- Certain municiple bond issues.  Work with your broker  or CPA on
      this one.

      n- Property exchanges  that are of  "like-kind",  meaning  that the
      tangible property or real estate swaps are of similar nature.

      o- Renting a vacation home out  for 14 days or less,  the income is
      not taxable.

      p- Any wages earned  by dependent  kids  that is $3OOO or less,  is
      considered tax-free.

      Also, a dependent kids investment income (dividends, interest etc.)
      not exceeding $5OO.

      q- Scholarships or fellowships  that have been granted  to a person
      after the date of  August 16, 1986, are tax-free, to the  extent of  
      only  covering tuition,  fees,  books and  articles needed  for the
      course. Grants provided for room and board etc., are taxable.

      r- Your employers fringe benefits  such as:  up to $5O,OOO  in life
      insurance coverage, up to $5OOO of death benefits, health insurance
      pension contributions,  group plan legal benefits and certain child
      and dependent care.

      s- Meals and lodging,  provided by  your employer  to allow  you to
      remain at work to finish a particular job, for instance.