Thus the traditional approach to reducing tax bills - defer income and accelerate deductions - is still sound.

Next on the year-end planning list is to decide whether to accelerate deductions into this year and defer income until next year.

And that makes it difficult to decide whether to accelerate or postpone income and deductions to take advantage of a differential in rates.

In broad terms, this tinkering can do two things: postpone income until a future year and accelerate deductions into the current year.

When to Wait In a few cases it may not pay to accelerate deductions.

A way to bet on this is to defer income until next year and to accelerate deductions this year, for a lower 1994 tax bill.

The lowering of rates makes the standard advice for year-end planning - to defer income and accelerate deductions - especially profitable this year.

Individuals will also want to accelerate deductions into this year, if possible; next year they will be worth less because of the lower rates.

In trying to accelerate deductions, investors do not have carte blanche to prepay expenses far in advance.

Moreover, to accelerate deductions and defer income is not always an appropriate strategy.