Q: In your article on tax-exempt investments (June 11), you said: "If you're in a tax bracket lower than 26 percent, tax exempt investments are not for you." Why? I'm in the 23 percent tax bracket and have been making tax-exempt investments recently based on the following rationale: If I invest $10,000 in a Maryland municipal bond with a yield of 10 percent I have $1,000 to spend at year's end. If I invest the $10,000 in a taxable investment yielding 10 percent, I pay a federal tax of $230 and a Maryland tax of $478, and end up with only $692. Am I overlooking something?

A: Yes -- you're overlooking the fact that a taxable investment of comparable quality will offer a higher yield than a tax-exempt investment. For example, a corporate bond of similar quality as a Maryland bond paying 10 percent can be bought (as I write this) to yield around 14 percent.

That makes the numbers look a little different. In the 23 percent tax bracket you will pay $322 federal income tax, plus $105 to the state of Maryland for a total tax bite of $427, leaving you $973 to spend.

But then on next year's federal tax return, you will be able to deduct that $105 state tax on your Schedule A, saving another $24. So it turns out that you're on the fence -- you have $1,000 on the Maryland tax exempt to compare with $997 on the taxable corporate bond. If you change the figures to reflect the 1984 drop in income tax rates (to 22 percent in your case) the balance shifts slightly the other way.

Not too many years ago, most tax advisers talked about 32 percent as the break point between taxable and tax-exempt investments. But yield spreads between the two have dropped, so we now generally use a 25 or 26 percent tax rate as the dividing line.

Q: I have a substantial estate and recently paid an attorney $550 to draw up a will that includes two trusts. Since my estate consists principally of stocks and bonds (aside from my residence), can any part of the $550 be deductible for tax purposes as an investment expense?

A: A part of an attorney's fee for services may be claimed as an investment expense on Schedule A only if the attorney did in fact give investment or financial advice apart from the legal services provided, and then only if the fee for that investment advice was specified separately on an itemized bill.

Q: Does the Deficit Reduction Act of 1984 reduce the holding period for stock dividends acquired under utility company deferred plans? I have heard conflicting information -- if you use the tax deferral, must you hold the shares six months or a year?

A: The Economic Recovery Tax Act (ERTA) of 1981, which established the tax deferral for utility company dividends, established a one-year holding period. (You understand, I'm sure, that you may dispose of the stock before the end of that time period; but in that event you lose the capital gain feature and must include the proceeds as ordinary income.)

What I call the Tax Reform Act of 1984 (one part of the Deficit Reduction Act, the other part being spending cuts) included some "conforming" instructions -- that is, changes to various other sections of the Tax Code made necessary by the new provisions.

But the section dealing with the deferral of taxable income on reinvested utility dividends was not among them. I have no idea whether this was an oversight or intentional; but in the absence of any modification, the holding period for the capital gains tax break on these dividends remains one year, and does not go to six months with the change to the short-term/long-term holding period.