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From: haleden@boulder.UUCP (Hal Eden)
Newsgroups: net.taxes
Subject: Re: Deducting State Taxes from the Feds
Message-ID: <62@boulder.UUCP>
Date: Thu, 13-Feb-86 10:04:18 EST
Article-I.D.: boulder.62
Posted: Thu Feb 13 10:04:18 1986
Date-Received: Sun, 16-Feb-86 05:47:37 EST
References: <5858@fortune.UUCP> <1066@ihuxk.UUCP>
Reply-To: haleden@boulder.UUCP (Hal Eden)
Organization: University of Colorado, Boulder
Lines: 30


>	> 
>	>    I hope this is the way that I think, or else I'm out
>	> another $700.  In '83 on my itemized deductions, I dedcuted the
>	>
>	>
>	> 					Thanks,   Jim
>	> 
>	What you did was correct, but not the usual way people handle this
>	situation, which probably accounts for the IRS letter.  The 1040
>		.
>		.
>		.
>	Bob Schleicher
>	ihuxk!rs55611

The only problem in calculating things the way that you did, Jim, is
that if you are in a state which allows you to deduct the amount you paid
in Federal taxes, you don't know how much state tax you actually paid
until you have finished calculating how much federal tax you.
I guess the instructions are the way that they are in order to
break this circular definition (and if your income is increasing every
year, the IRS gets a little more out of you).  Since this is a converging
series (or something like that) you could calculate the actual figure
through successive approximations until you find a fixpoint.  But,
If you are in a state which doesn't allow deduction of the Fed Tax,
your calculation is correct.  (That doen't mean that the IRS won't
expect you to figure it the other way)

haleden